A Smart Strategy
Buying stocks at their 52-week highs has been a smart strategy historically. These stocks often have momentum that can move them still higher. And a study taken by the Chicago Tribune found that of 256 firms whose shares hit 52-week highs on the New York Stock Exchange in mid-January, more than half outperformed the S&P 500 through the end of the first quarter, and one-tenth rose by more than 15%.
But choosing the right stock is crucial because some stocks at their highs are poised to fall, while ones with rising earnings that exceed analysts' forecasts and strong cash flow could go still higher.
Bottom Line: Look for stocks with price-to-earnings ratios under 15, which more often than not indicates a potential bargain.
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But choosing the right stock is crucial because some stocks at their highs are poised to fall, while ones with rising earnings that exceed analysts' forecasts and strong cash flow could go still higher.
Bottom Line: Look for stocks with price-to-earnings ratios under 15, which more often than not indicates a potential bargain.
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posted by Bob Moser at
8:05 PM
1 Comments:
Never buy at the 52 week high. In Warren Buffets world this is akin to swinging with your eyes closed at the fastest of fast balls!!! Always wait (i.e. patience) for the daily or weekly pullback. Patience coupled with a well researched plan is how to make money in the market.
Consider selling put with a strike price at or near the pullback price. This will give you immediate income and a guaranteed discount price if the put is executed.
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Anonymous, at 10:22 PM
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