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Stock Picks From New 52 Week Highs

31 August 2004
Author: site admin Posted under Stock Picks, Strategies

New 52 week highs are a great place to look for stocks with some upside potential. You don’t want just any
stock on the list though. Here’s a winning formula for using new highs to pick stocks.

The Formula
1.Check 52 week high list to find stocks making an all-time high (use a ten [10] year chart).
2.Current share price is within 10% of the share price at last earnings report (use our archive symbol search).
3.Being on our watch list is a plus but not mandatory (See Note a. below).
4.Has at least four (4) weeks until it next reports earnings (See Note b. below).
5.Definitely find out when it next reports earnings if you decide to buy it. Call the company if necessary.

The Reasoning
1.Stocks making all-time new highs (minimum of ten year new high) have no upside resistance.
2. Stocks with less than 10% price appreciation since the last earnings report have more room for upside than a stock that has already gone up say 25%.
3. Stocks that make our watch list have reported some good looking earnings numbers. Like I said above, it is not mandatory. There are other reasons to drive a stocks price up. Maybe its a good story with new products or new management.
4. Four weeks gives enough time for a stock to run upwards in anticipation of the next earnings report.
5. Personally I will sell a stock before it reports earnings and especially on any parabolic spike. However, you need to develop your own investing style to limit risk.

Notes
a. A stock that makes our watch list will have an “X” under the abbreviated table header “wl”.
b. You can guesstimate when a stock will next report earnings by looking at when it reported for the same quarter last year. If we don’t have it, some stock chart sites have an option on the chart to show when a stock reported earnings in the past.

This is a winning formula which can work in any market condition, although it will definitely work better when the Markets are trending higher.

By Harvey


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