Searching for new 52 Week Highs amongst Value Stocks

Tuesday, Jul 16 2013 by
Searching for new 52 Week Highs amongst Value Stocks

Despite the market volatility of recent months, the FTSE is up by around 11% so far this year, helping to propel a handful of shares towards their 52-week highs. Financial newspapers and websites the world over regularly publish lists of shares that are hitting their one-year highs and lows, but these nuggets of information are much more useful than they may at first seem. 

In momentum circles it’s widely thought that investors in companies trading close to their 52-week highs will use that price as a reference point to judge the significance of any news from these companies. Even on good news, they can be reluctant to bid up the price even further because of this so-called ‘anchoring’ effect. But eventually the full impact of the news can’t be denied by the market and the share price rises anyway – and it’s here that momentum investors can profit. These findings were central to a study by George and Hwang, who found that buying stocks that were at a 52-week high was a highly profitable strategy. 

Stockopedia’s 52 Week High Momentum Screen has produced an impressive 31.9% return over the past year, beating the FTSE benchmark by 15.6%. It’s  performance has been driven by gains at the likes of mother and baby products retailer Mothercare (LON:MTC) and housebuilder M J Gleeson (LON:GLE) . 


In a twist on conventional momentum strategies however, research has also found that by combining momentum with value screening, investors can profit even more by taking advantage of the negative correlation between the two – ie. when one component does well the other may not. So to try and find a happy balance of 52-week highs that still rank strongly in the market as potential value opportunities, we had a look at the stocks meeting both criteria in the UK and Europe. 

By its nature, the 52-Week High screen is highly sensitive and can see regular changes to the list of qualifying shares. Nevertheless, as of last Friday, among the UK quoted companies on the screen was insurance brokerage Brightside (LON:BRT), which has seen its shares rise by nearly 15% to 27p since the start of July. With a Stockopedia ValueRank of 84…

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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. ?>

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