4 Stocks Trading Near 52-Week High With More Upside Potential

Zacks Investment Research proposes a momentum investing strategy identifying stocks near their 52-week highs that still possess significant upside potential, countering typical overvaluation concerns. The methodology screens for companies demonstrating strong earnings growth, sustained positive price momentum, and relative undervaluation compared to industry peers. Four specific stocks highlighted by this screen are Kyndryl Holdings (KD), Comfort Systems USA (FIX), Phibro Animal Health (PAHC), and Deutsche Bank (DB), each underpinned by distinct growth drivers and robust financial fundamentals, suggesting a 'buy high, sell higher' approach for investors.

Analysis

Zacks Investment Research presents a momentum-based investment strategy focused on identifying stocks trading within 20% of their 52-week highs that may possess further upside. The screening methodology counters typical overvaluation concerns by filtering for companies with positive price momentum over 4 and 12 weeks, a Zacks Rank #1 (Strong Buy), and valuation metrics (P/S and forward P/E) below industry medians. Four companies are highlighted: Kyndryl Holdings (KD) is benefiting from cloud and digital transformation trends, improving margins by shedding less profitable contracts, and has seen its fiscal 2025 EPS estimate rise 0.5% to $2.18, with an average 37.53% trailing earnings surprise. Comfort Systems USA (FIX) is executing a growth-by-acquisition strategy, recently adding an estimated $90 million in annual revenue, supported by a record $6.9 billion backlog and a 17.57% average earnings surprise. Phibro Animal Health (PAHC) demonstrates stability through its core animal health products, innovation in vaccines, and global capacity expansion, boasting a 30.62% average earnings surprise. Deutsche Bank (DB) shows balance sheet strength with a 3.3% deposit CAGR over three years, a 134% liquidity coverage ratio, and is pursuing efficiency through digital transformation, though its earnings history is volatile, with an average negative surprise of 66.85% despite a recent 0.9% upward revision to its 2025 EPS estimate.

Key Decisions for Investors

• Investors employing a momentum strategy should consider these screened stocks, as the methodology aims to mitigate the risk of buying overvalued assets near their peak.
• Kyndryl (KD) and Comfort Systems (FIX) appear particularly compelling within this framework, given their strong operational drivers, consistent positive earnings surprises, and upward analyst estimate revisions.
• For Deutsche Bank (DB), a cautious approach is warranted; its strong liquidity and strategic initiatives are positive, but its significant negative average earnings surprise indicates a higher-risk profile requiring deeper due diligence.
• Phibro Animal Health (PAHC) could be viewed as a more stable growth holding within the animal health sector, supported by product leadership and ongoing capital investment in manufacturing.