Stocks that are now reaching new highs have been doing so over
the last few months. Will that trend continue? And if it does, what
stocks are the best to "pay up" for?
I took a look at which stocks had huge gains in the third quarter
and wanted to share them with you. Beyond that I wanted to take a
look at which stocks have the best chance to continue hitting new
highs. Even though these stocks seem expensive now, if they keep
hitting new highs, the price now will seem cheap in just a few
I wanted to exclude the one million percent gainers from any screen
that I might run, so I limited our results. The best way to do that
was to look for stocks that were priced higher than $5 right now.
So for all stocks I just wanted the stocks that have tripled. I set
the benchmark at 200% performance. There are some pitfalls in this
list, but instead of just spitting out the list I thought I would
do a little value add along with it.
Over the last 12 weeks, here are the stocks that have the greatest
performance. Only stocks with prices great than $5 were eligible to
get on this exclusive list.
Starting at the top we have a 450% return... which is awesome. What
is not awesome is that it has a market cap of $9M - so this bio
tech play might not be what we are looking for.
Next up is a 392% performer,
which has a very respectable market cap of $924M and an $84 stock
price. The problem here is that the stock has an average volume of
17 shares, and typically does not trade at all. Liquidity issues
seem to dominate the top of the list!
) is the first stock on that list that is something really worth
looking at. It is almost $400M in market cap and has liquidity in
the form of daily volume of around 1.5M shares. The stock is
currently a little below the 52 week high of $7.80 which was
reached on October 1, 2013.
Back on June 24, the stock closed at $1.42, so we are talking about
a massive run higher throughout the quarter. BCRX makes enzymes
that are used to fight diseases, including Peramivir which is used
to fight the flu.
The main catalyst in the quarter was the completion of phase I
trial for a drug... along with a host of upgrades from analysts.
The company also did a secondary around $4, so that risk is also
off the table.
Who Keeps On Running?
Some of those stocks on that list of huge winners are a little
suspect. I know I wouldn't want to throw my money at them now, or
even before the mega runs they had. There are others that I would
prefer to focus on.
When I add in the idea of Zacks Rank #1 (Strong Buy) to the mix, I
get a different list. I also made the minimum return a paltry 50%,
be we still have some big winners. By screening against the Zacks
Rank, I get a list of names that have continued to see earnings
estimate increases throughout the quarter. That means that analysts
continue to like the future prospects for these stocks
the big runs they have had.
The #1 List
I kept the idea of stock priced great than $5, and seeing as they
have to have coverage from at least one analyst you are not going
to see that many liquidity challenged stocks. This list is topped
Phoenix New Media
) after it returned 124% over the last 12 weeks. It has a market
capitalization just short of $1 billion and a double digit stock
price. Acceptable volume of 900,000 shares over the last 30 days
tells me you can buy this stock without moving the market as well.
As a player in the Chinese internet landscape, FENG comes with a
fair degree of risk. The stock hit a new high again today, October
7, at a price of $13 even.
Why This List is Only a Start
I see a lot of China plays on this list and while the analysts like
the future prospects over the near term, these companies also carry
a decent amount of long term risk.
Numerous articles out of China talk of a real estate mentality that
is just screaming bubble. Those types of situations will always
attract quick speculation capital, but are rarely good for long
Not that all China stocks are bad, there are many that are good,
but further research and diligence needs to be done on each of the
names on this list.
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Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor
in charge of the
Run Investor service
, a Buy and Hold service where he recommends the stocks in the
Brian is also the editor of
Breakout Growth Trader
a trading service that focuses on small cap stocks and also carries
a risk limiting strategy.
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BIOCRYST PHARMA (BCRX): Free Stock Analysis
CAESAR STONE SD (CSTE): Free Stock Analysis
PHOENIX NEW MED (FENG): Free Stock Analysis
METHODE ELECT-A (MEI): Free Stock Analysis
UBIQUITI NETWRK (UBNT): Free Stock Analysis
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