Momentum Ideas: The Top 10 Most Profitable Stocks Hitting New Highs

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(List compiled by Eben Esterhuizen, CFA)

If there's one thing we know about the market, it's that it never ceases to surprise--there are just too many factors to ever really expect the unexpected.

That said, investors themselves are actually quite predictable. Which is why the notion of patterned human behavior informs a number of different trading strategies. 

Take momentum investing, for instance. History has shown us that traders are notoriously slow to react to new information. After good news around a stock breaks, it takes the market a while to incorporate this new intel, and adjust share price accordingly--meaning its share price will likely continue to climb.

So a stock approaching a 52-week high, having just recently seen the arrival of good news, presents an interesting opportunity--because it's just when the stock starts gaining traction that other investors take notice.

Seeing which stocks are nearing 52-week highs is a good starting point--but investing on technicals alone tells only half the story. It makes far more sense to examine these companies in tandem with fundamental indicators.

So we narrowed down our universe of momentum stocks, selecting only the ones that are more profitable than their competitors…

Here's a list of 10 profitable companies hitting new 52-week highs. (McDonalds made the list)

Think there's more good news yet to be priced into these names?

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1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

1. American Electric Power Co., Inc. (AEP): Engages in the generation, transmission, and distribution of electric power to retail customers. The stock is currently 2.29% away from its 52-week high. TTM gross margin at 32.3% vs. industry average at 27.45%. TTM operating margin at 21.24% vs. industry average at 18.97%. TTM pretax margin at 15.27% vs. industry average at 14.56%.

2. BCE, Inc. (BCE): Provides wireline voice and wireless communications services, Internet access, data services, and video services to residential, business, and wholesale customers in Canada. The stock is currently 2.25% away from its 52-week high. TTM gross margin at 60.35% vs. industry average at 50.07%. TTM operating margin at 22.04% vs. industry average at 15.56%. TTM pretax margin at 16.19% vs. industry average at 13.85%.

3. Colgate-Palmolive Co. (CL): Manufactures and markets consumer products worldwide. The stock is currently 2.35% away from its 52-week high. TTM gross margin at 61.01% vs. industry average at 52.8%. TTM operating margin at 23.83% vs. industry average at 19.11%. TTM pretax margin at 22.92% vs. industry average at 18.%.

4. Delta Natural Gas Co. Inc. (DGAS): Distributes or transports natural gas in central and southeastern Kentucky. The stock is currently 1.03% away from its 52-week high. TTM gross margin at 23.89% vs. industry average at 22.02%. TTM operating margin at 18.03% vs. industry average at 13.57%. TTM pretax margin at 13.08% vs. industry average at 11.2%.

5. Duke Energy Corporation (DUK): Operates as an energy company in the Americas. The stock is currently 1.51% away from its 52-week high. TTM gross margin at 34.78% vs. industry average at 27.45%. TTM operating margin at 22.55% vs. industry average at 18.97%. TTM pretax margin at 20.7% vs. industry average at 14.56%.

6. First Capital Inc. (FCAP): Operates as the bank holding company for First Harrison Bank that provides various banking services to individuals and business customers. The stock is currently 2.18% away from its 52-week high. TTM gross margin at 73.18% vs. industry average at 61.01%. TTM operating margin at 35.58% vs. industry average at 33.06%. TTM pretax margin at 20.73% vs. industry average at 13.65%.

7. FPIC Insurance Group Inc. (FPIC): Operates as an insurance carrier in the medical professional liability insurance sector of the property and casualty insurance industry in Florida. The stock is currently 0.4% away from its 52-week high. TTM gross margin at 25.21% vs. industry average at 16.79%. TTM operating margin at 25.21% vs. industry average at 13.5%. TTM pretax margin at 22.06% vs. industry average at 12.09%.

8. Hershey Co. (HSY): Engages in manufacturing, marketing, selling, and distributing various chocolate and confectionery products, pantry items, and gum and mint refreshment products worldwide. The stock is currently 2.9% away from its 52-week high. TTM gross margin at 46.09% vs. industry average at 34.32%. TTM operating margin at 17.78% vs. industry average at 12.42%. TTM pretax margin at 15.79% vs. industry average at 9.74%.

9. The Coca-Cola Company (KO): Distributes, and markets nonalcoholic beverages worldwide. The stock is currently 2.01% away from its 52-week high. TTM gross margin at 66.67% vs. industry average at 59.78%. TTM operating margin at 24.48% vs. industry average at 23.39%. TTM pretax margin at 36.13% vs. industry average at 25.85%.

10. McDonald's Corp. (MCD): Operates as a foodservice retailer worldwide. The stock is currently 2.32% away from its 52-week high. TTM gross margin at 44.97% vs. industry average at 37.36%. TTM operating margin at 30.44% vs. industry average at 19.26%. TTM pretax margin at 29.27% vs. industry average at 17.79%.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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