Investors generally consider a stock's 52-week high a good criterion for an entry or exit point. Stocks touching new 52-week highs are often predisposed to profit-taking, resulting in pullbacks and trend reversals.
Moreover, given the high price, investors often wonder if the stock is overpriced. While the speculation is not completely baseless, not all stocks hitting a 52-week high are necessarily overpriced.
Investors might lose out on top gainers in an attempt to avoid the steep prices.
Stocks such as Digital Turbine APPS, BankUnited BKU, Mercury General MCY and Green Dot GDOT are expected to maintain their momentum and keep scaling new highs. More information on a stock is necessary to determine whether there is scope for further upside.
Here, we discuss a strategy to find the right stocks. The technique borrows from the basics of momentum investing and 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 the premium) has helped them reach this level. But that does not always indicate an impending decline. Factors such as robust sales, surging profit levels, earnings growth prospects and strategic acquisitions, which encouraged investors to bet on these stocks, could keep them motivated if there are no tangible negatives. 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 and sales, ensuring the continuation of their rally for some time.
Current Price/52 Week High >= .80: 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 0.8 implies the stock is trading within 20% of its 52-week high range.
% Change Price – 4 Weeks > 0: This 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.
One-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 =1: 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) 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 >= 5: This parameter will help screen stocks that are trading at $5 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 10 stocks that made it through the screen:
Digital Turbine appears well-positioned for near-term fundamental progress. Its fiscal 2027 guidance points to revenues of $630–$650 million and non-GAAP adjusted EBITDA of $135–$145 million, with continued gross margin expansion and a strengthened balance sheet providing additional operational flexibility. Three high-impact strategic announcements from May 2026 add meaningful near-term conviction. A new partnership with Orange — serving 340 million customers across 26 countries — expands on-device app distribution across Europe, with rollout expected to begin in the second half of 2026. A significantly deepened Google Cloud collaboration embeds Gemini Enterprise Agent Platform directly into DT's Ignite Graph and DT iQ intelligence layer. A Databricks partnership further unifies and operationalizes mobile data intelligence across DT's one-billion-device global footprint, strengthening advertiser targeting and publisher monetization capabilities.
The stock has returned 127.7% in the past six months. It has a trailing four-quarter earnings surprise of 8.09%, on average.
BankUnited looks well-positioned for near-term upside, supported by structural improvements in its balance sheet and ongoing commercial momentum. The June 2026 declaration of a $0.33 quarterly dividend — to be paid out on July 31, 2026 — reflects the board’s confidence in earnings durability. Non-brokered deposits have grown $1.4 billion year over year, with non-interest-bearing demand deposits now comprising 30% of total deposits, meaningfully strengthening the funding mix. Average deposit costs have declined to 2.12%, while wholesale funding has fallen $749 million year over year, reducing reliance on expensive borrowings. Criticized and classified loans have dropped 24% year over year, signaling a healthier credit environment. With a CET1 ratio of 12.2% and second-quarter 2026 results scheduled for July 22, BKU enters its next catalyst window from a position of fundamental strength.
The stock has returned 8.2% in the past six-month period. It delivered a trailing four-quarter earnings surprise of 6.11%, on average.
Mercury General is positioned constructively for the near term, underpinned by strengthening fundamentals and proactive capital management. Net premiums written rose 17.9% year over year in the first quarter of 2026 to $1.55 billion, reflecting healthy demand across personal auto and homeowners lines. Policies-in-force expanded to approximately 2.31 million company-wide, with personal auto and homeowners segments adding customers. The combined ratio improved sharply to 89.3%, signaling disciplined underwriting. On the capital front, Mercury completed a $250 million unsecured revolving credit facility in June 2026, maturing in 2031, and issued senior 10-year notes at 6.250%, broadening funding flexibility. Average invested assets grew to $6.64 billion, supporting rising net investment income. The board maintained its quarterly dividend at $0.3175 per share, reflecting confidence in ongoing earnings generation.
This stock has surged 22.3% in the past six-month period. It has a trailing four-quarter earnings surprise of 61.76%, on average.
Green Dot stands at a pivotal juncture with near-term catalysts firmly in place. The strategic acquisition by Smith Ventures and CommerceOne — overwhelmingly endorsed by more than 99% of votes cast at the June 2026 special shareholder meeting — is expected to close in third-quarter 2026, delivering $8.11 per share in cash alongside equity in the new publicly traded bank holding company. First-quarter 2026 revenues advanced 17% year over year to $656 million, while adjusted EBITDA rose 13% to $102 million. The Arc-powered embedded finance platform continues expanding BaaS partnerships and deposits. An anticipated Stripe integration is set to add meaningful scale to Money Movement. Disciplined cost reduction, a strengthening investment portfolio, and a growing Earned Wage Access business reinforce the earnings outlook ahead.
This stock has gained 3.9% in the past six months. It has a trailing four-quarter earnings surprise of 105.7%, on average.
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Green Dot Corporation (GDOT): Free Stock Analysis Report
BankUnited, Inc. (BKU): Free Stock Analysis Report
Mercury General Corporation (MCY): Free Stock Analysis Report
Digital Turbine, Inc. (APPS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).