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Tickers in this Article: ORLY, AZO, AAP, FDO, GMCR, NFLX, OCN
Companies trading near their 52-week lows and/or that have recently made a low look like they will continue to trade in the doldrums. This bottom-dragging might make anxious shareholders and institutions disillusioned and ready to jettison the shares for window dressing purposes. However, I believe that companies that are trading near their 52-week high or that have recently made a high may stand a good chance of trading even higher. The reason: monkey see, monkey do. Investors like winners and often chase rising stocks. In addition, money managers looking to dress up their portfolios may want to add the stock to their holdings.

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With that in mind I searched for companies that are trading at or near their 52-week high. I then isolated the companies that are expected to show a profit in the coming year, which means some of these stocks may be worth a closer look.

Company
Market Capitalization
Current Price (% Of 52-Week High-Low Range)
Family Dollar
(NYSE:FDO)
$4.3 billion
92.94
Green Mountain Coffee
(Nasdaq:GMCR)
$1.1 billion
94.47
Netflix
(Nasdaq:NFLX)
$2.3 billion
91.04
Ocwen Financial
(NYSE:OCN)
$624.7 million
100
O\'Reilly Automotive
(Nasdaq:ORLY)
$4.5 billion
87.79
Data as of market close March 17, 2009

O'Reilly All Right
Although consumers have been reluctant to dip into their wallets for many things, they seem to be a little more willing to part with their dough when it comes to repairing their cars. As evidence check out the latest financial results from O'Reilly Automotive.

In the fourth quarter ended December 31st the Missouri-based automotive parts retailer earned 37 cents a share excluding items which was well north of the 30 cents a share analysts had been expecting. I should also point out that in the comparable period the year before the company had earned 35 cents a share. Also in the period comp sales at O'Reilly stores were up a healthy 6.2%. In this economy I think that is a big plus.

Not to mention that the company also indicated that it's looking for adjusted earnings for 2009 to come in between $1.83-1.87 a share. Note that the Street estimate for '09 is currently $1.84. (For more on analyst expectations, read Analyst Forecasts Spell Disaster For Some Stocks.)

Investors seem to like what they see. The shares currently trade just shy of their 52-week high (of $35.47), which was actually hit on March 13.

What about its prospects for the longer-term? Interestingly, according to data on Yahoo!Finance, the company is expected to grow more than 16% per annum in the next five years.

While I'm taking a glass half-full view on O'Reilly, I also think that other auto parts/supply retailers such as Autozone (NYSE:AZO) and Advance Auto (NYSE:AAP) could fare well. According to data on Yahoo!Finance, Autozone and Advance Auto are both expected to grow more than 12% per annum in the next five years.

Bottom Line
There is no guarantee that a company trading at or near its 52-week high will trade higher, but in this market they might be worth a closer look.

To learn more about investing based on a stocks 52-week trading range, check out the 52-Week Highs/Lows section of our Market Breadth Tutorial.

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