Vista Gold (ASQ:VGZ): buy, sell or hold?

Vista Gold (ASQ:VGZ): buy, sell or hold?

Article image

Shares in Vista Gold (ASQ:VGZ) are currently trading close to a 52 week high, with the share price up by around 35.8% - to 1.26 - over the past week. On a one-month basis, the Vista Gold share price has risen by 26.1%.

For investors holding the stock (or considering buying it), the question is: what now? Is it best to buy more and ride the uptrend, sell and take the profits, or do nothing? 

At Stockopedia we're aware of the popularity of the 52-week high as a market timing indicator. In our experience, investors are often left wondering what to do when it happens when a 52-week high is hit. As a lot of our work is driven by insights from academic research, here’s a primer on what the academic research says in this area:

What happens when a share hits a new high?

52-week highs are always good news. But surprisingly, the prices of high performing shares can be slow to move when they publish positive earnings news.

Research shows this happens because investors are cautious about bidding high performing shares any higher (even if they deserve it). Psychologists call this anchoring. As humans, we tend to take our time when it comes to changing our opinions in the face of new information - even when it's good news.

This emotional tug-of-war often ends with the ‘new high’ stock drifting higher in price over the coming weeks and months. The upward trend is called “post earnings announcement drift”. As the news sinks in over time, momentum takes over and the price moves higher and higher.

A look at Vista Gold’s StockReport could offer more insight into what’s driving the momentum in its share price - and whether that might continue.

What does this mean though for current shareholders and those considering buying? The post-earnings announcement drift means that a share price is likely to continuing rising after a given share hits at 52-week high. Of course, you would want to look at other factors (such as whether a share has good fundamentals) before making a decision to buy or sell.


What does this mean for potential investors?

With Vista Gold trading close to a 52 week high, it’s possible that investors in the market are uncertain about where the price will move next. It's important to remember that momentum on its own is no guarantee of future returns.

To get a better idea about whether this trend will continue, it's worth doing some investigation yourself. Indeed, we've identified some areas of concern with Vista Gold that you can find out about here.


About us

Stockopedia helps individual investors make confident, profitable choices in the stock market. Our StockRank and factor investing toolbox unlocks institutional-quality insights into thousands of global stocks. Voted “Best Investment Research Tools” and “Best Research Service” at the 2021 UK Investor Magazine awards.

Vista Gold's StockRank™

Momentum TrapAdventurous

Vista Gold's StockRank™

With a StockRank of 16, Vista Gold is in the bottom 16% of the 9,637 stocks we cover in North America, according to our proprietary ranking system.

See the full StockReport

Absolutely Perfect

"Trialed multiple other platforms - this is by far my favourite. Other platforms do not even have half the stuff that you can find on Stockopedia. Love it!"

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.