Which New 52 Week Highs You Should Buy Now
We may not all be ready to agree that the fiscal cliff will come (sooner or later), but when it does, many stocks will feel the pinch. It's all pretty simple really. The government can't spend more than revenue raised forever without monetizing the dollar. For savers, the frustration of watching the government artificially keep interest rates low in a hopeless attempt at mitigating previous failed policies is heart-wrenching
A few companies are bucking the trend and trading near their 52 week highs. Several banks make the list, providing hope that financials may offer hope again.
Finding stocks making 52 week highs is easy; finding stocks making 52 week highs likely to continue higher is the real trick. I believe these stocks have a better than average chance of continuing higher.
I use a filtering process that includes:
- Minimum trading threshold; eliminating thin stocks that leave so many investors up late at night.
- Year-over-year results that are improving at a relative rate as stock price increases; we want plenty of reason why the stock should continue higher.
- Analyst price targets that are higher than the current price; we want others after us to continue the buying pressure.
- Limited insider selling; because of compensation methods and diversification goals, some insider selling is acceptable, but management should have skin in the game.
- Low short interest; I consider short sellers to be the smart money -- there is no reason to bet against them when we have plenty of stocks to pick from.