Stocks hitting their 52-week high and delivering consistent performances offer attractive opportunities to investors while building a portfolio. This is because stocks near that level are perceived to be winners. However, stocks touching a new 52-week high are often predisposed to profit-taking, resulting in pullbacks and trend reversals.
Given the high price, investors often wonder if the stock is overpriced. While the speculations are not absolutely baseless, all stocks hitting a 52-week high are not necessarily overpriced.
Investors might lose out on top gainers in an attempt to avoid the steep prices.
Stocks such as Fluor FLR, Arrow Electronics ARW, Smithfield Foods, Inc. SFD and Avnet AVT are expected to maintain their momentum and keep scaling new highs. Extensive information on a stock is necessary to understand whether or not there is scope for upside.
Here, we discuss a strategy to find the right stocks. The strategy borrows from the basics of momentum investing. This technique bets on “buy high, sell higher.”
52-Week High: A Good Indicator
Many times, stocks that hit a 52-week high fail to scale higher despite having potential. This is because investors fear that the stocks are overvalued and expect the price to crash.
Overvaluation is natural for most of these stocks as investors’ focus (or willingness to pay a premium) has helped them reach the level. But that does not always indicate an impending decline. Factors such as robust sales, surging profit levels, earnings growth prospects and strategic acquisitions that encourage investors to bet on these stocks could keep them motivated if there is no tangible negative. In other words, the momentum might continue.
Also, when a string of positive developments dominates the market, investors find their underreaction unwarranted, even if there are no company-specific driving forces.
Setting the Right Filters
We ran a screen to zero in on 52-week high stocks (trading near the high level) that hold tremendous upside potential. The screen includes parameters to shortlist stocks with strong earnings growth expectations, sturdy value metrics and price momentum.
Moreover, the screen filters stocks that are relatively undervalued compared to their peers in terms of earnings as well as sales, ensuring the continuation of their rally for some time.
Current Price/52 Week High >= .11: This is the ratio between the current price and the highest price at which the stock has traded in the past 52 weeks. A value greater than 0.11 implies that the stock is trading within 20% of its 52-week high range.
% Change Price – 4 Weeks > 0: It ensures that the stock price has moved north over the past four weeks.
% Change Price – 12 Weeks > 0: This metric guarantees a continued upward price momentum for the stock over the past three months as well.
Price/Sales <= XIndMed: The lower, the better.
P/E using F(1) Estimate <= XIndMed: This metric measures the amount an investor puts into a company to obtain one dollar of earnings. It narrows down the list of stocks to those that are undervalued compared to the industry.
1-Year EPS Growth F(1)/F(0) >= XIndMed: This helps choose stocks that have higher growth rates than the industry. This is a meaningful indicator, as decent earnings growth adds to investor optimism.
Zacks Rank <=2: No screening is complete without the Zacks Rank, which has proved its worth since its inception. It is a fundamental truth that stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) have always managed to brave adversities and beat the market average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price >= 8: This parameter will help screen stocks that are trading at $8 or higher.
Volume – 20 days (shares) >= 100000: The inclusion of this metric ensures that there is a substantial volume of shares, so trading is easier.
Here are our four picks out of the 15 stocks, each carrying a Zacks Rank #1, that made it through the screen:
Fluor Corporation started 2026 with a $25.5 billion backlog — 81% reimbursable — anchoring strong revenue visibility. Full-year 2025 revenues were $15.5 billion, bolstered by $12.0 billion in new awards. In March 2026, Fluor signed a limited notice to proceed with TeraWulf to plan and build a 480-megawatt data center campus in North Central Kentucky. In April 2026, the company secured the front-end engineering and design contract for America's first new refinery in over 50 years in Brownsville, TX, expected to process over 60 million barrels annually, and contracted with X-energy for an advanced nuclear project in Seadrift, Texas. With $1.4 billion in share repurchases planned and NuScale proceeds boosting capital flexibility, Fluor is well-positioned for strong, accelerated growth ahead.
The Zacks Consensus Estimate for the company’s 2026 earnings has moved 20.6% north to $2.75 per share in the past 60 days. FLR surpassed the Zacks Consensus Estimate twice in the trailing four quarters while missing the same twice, the average surprise being 17.62%.
Arrow Electronics’ 2025 sales reached $30.9 billion, up 10% year over year, with fourth-quarter revenues surging 20% to $8.7 billion, exceeding guidance. The Enterprise Computing Solutions backlog ended 2025 at a record high, up over 75% year over year. Global Components book-to-bill remained above parity across all regions for the fourth consecutive quarter. Non-GAAP return on working capital improved 170 basis points to 18.1%. In March 2026, Arrow consolidated its global components business onto a redesigned, omnichannel arrow.com platform, integrating product selection, purchasing, engineering support, and supply chain services in one workflow.
The Zacks Consensus Estimate for the company’s 2026 earnings has moved 3.9% north to $13.59 per share in the past 60 days. ARW’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 17.88%.
Smithfield Foods posted record fiscal 2025 results. Full-year net sales reached $15.5 billion, while adjusted operating profit surged 30.5% to $1.336 billion, with an adjusted operating margin of 8.6%. The flagship Packaged Meats segment delivered $1.089 billion in adjusted operating profit at a 12.4% margin. The pending Nathan's Famous acquisition (~$450 million), expected to close in H1 2026, will permanently secure a high-value brand and unlock retail and foodservice growth. A $1.3 billion Sioux Falls processing facility will modernize manufacturing and drive sustained efficiency gains. The April 2026 launch of Smithfield Meal Ready Cuts accelerates premium product innovation. Its board raised the annual dividend by 25% to $1.25 per share, reflecting financial discipline and shareholder confidence.
The Zacks Consensus Estimate for the company’s 2026 earnings has moved 11.8% north to $2.74 per share in the past 60 days. SFM surpassed the Zacks Consensus Estimate in three of the trailing four quarters while mssing once, the average surprise being 15.28%.
Avnet is at a compelling inflection point in fiscal 2026, backed by accelerating fundamentals. Fiscal second-quarter results showed broad-based strength. Total sales of $6.3 billion rose 12% year over year, surpassing guidance, while the company generated $208 million in operating cash flow. Asia posted its sixth consecutive quarter of year-over-year growth, recording $3.2 billion in revenues, and Farnell surged 24% year over year. Book-to-bill ratios remain above parity across all regions. A March 2026 partnership with the EDGE AI Foundation positions Avnet at the forefront of edge AI adoption, broadening its ecosystem. Quarterly dividends of $0.35 per share reflect management's confidence in cash generation. With third-quarter fiscal 2026 results due on April 29, the recovery trajectory remains firmly intact.
The Zacks Consensus Estimate for the company’s fiscal 2026 earnings has remained unchanged at $4.62 per share in the past 60 days. AVT’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 10.85%.
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Avnet, Inc. (AVT): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).