Buying stocks that are making new highs is incredibly difficult for many investors. I know it is for me. Ed recently looked at this topic in more depth in a series of articles on trend clarity, concluding with two recent pieces highlighting trending small cap and mid cap stocks.
As a value investor by nature, I want to believe that stocks making new highs are too expensive and thus likely to fall. I’m looking for an excuse not to buy!
But the reality is that there’s plenty of academic evidence to show that share price momentum can be a powerful and durable trend, especially when it’s supported by solid fundamentals and rising profits.
This week I want to revisit my 52-week high screen, which I last covered here in June 2023. This screen was designed to help me overcome my inbuilt bias against stocks making new highs by including some quality and valuation measures designed to highlight decent businesses at reasonable prices.
52-week high screen
I have to confess I had not looked at this screen for a while, prior to writing this article. But a quick look at the results suggests I should check this screen more often. The screen’s current results include a number of strong recent performers. including a number of shares currently in my Stock in Focus portfolio.
As a quick reminder, this screen uses a handful of fairly simple rules to look for profitable companies with strong momentum and solid fundamentals.
You can view the current screen results here and make your own copy of the screen if you wish.
In the remainder of this piece, I’m going to take a closer look at three of the stocks that interest me in the screen results and highlight three more 52-week high stocks we’ve covered elsewhere on the site recently.
B.P. Marsh & Partners (LON:BPM)
This small-cap investment firm is a specialist investor in early-stage insurance businesses. Graham highlighted the appeal of this business in a recent Daily Stock Market Report:
they invest in a niche which we can’t easily access, and they do it well
BP Marsh may not seem like an obvious momentum play, but the share price has said otherwise in recent…
