Most investors like to buy stocks approaching its 52 week low as they provide the most upside potential when the market makes a turnaround. However, on the contrary some investors prefer to purchase stocks at or near its 52 week high. These stocks are usually building upon momentum and may trade even higher, especially if the company consistently exceeds analyst expectations.
In the previous weeks shares of Exelon (EXC, Financial), Humana Inc. (HUM, Financial), GlaxoSmithKline (GSK, Financial), Visa Inc (V, Financial) and Spectrum Pharmaceuticals (SPPI, Financial) have reached and exceeded their 52 week highs. Below, I’ll take a look at each.
With the recent approval of Exelon-Constellation merger by the Maryland Public Service Commission, Exelon, a large utilities company will increase its market cap by almost 33%. The company currently has a market cap of $26, whereas Constellation Energy Group has a market cap of just under $8 billion. As word of the approval hit the market, share prices reached its 52 week high of $45. Subsequently prices have fallen, and shares are currently priced near $39.
Exelon has strong fundamentals and like other utilities, the company pays an enticing dividend which provides investors with great stability through uncertain times and recessions. Shares are trading at a price to earnings multiple of 10.5, earns a profit (margin) of 13% and has grown earnings by 16% each quarter on a year over year basis. The annual dividend of $2.10 yields 5.3%; the company pays out 56% of earnings as dividends.
Humana is one of the largest healthcare providers in the United States. The company offers insurance products and health and wellness services to employer group. Despite failing to meet analyst expectations, shares of Humana recently reached its 52 week high of $96, however shares are now trading 8% lower at $89. Shares reached its high, upon the release of the fourth quarter earnings report. The company earned a profit which did meet analyst’s expectations, however on the contrary, the company expects EPS of $7.50-$7.70 compared to the analyst average of $8.00 of FY 2012.
Humana has still managed to grow revenue by 9% during the quarter on a year over year basis, earnings have grown 85%. The company is trading at a price to earnings multiple of 10.5, the company does have relatively poor profit margin and operating margin of 4% and 6%, respectively.
GlaxoSmithKline is a global leader in the development of pharmaceutical products, based in the United Kingdom. The company also develops over the counter medicines and health related consumer products for consumers worldwide. Shares recently reached their 52 week of high of $46, however fells have fell since and are currently trading near $45, as the company reported record growth in a major international market. GlaxoSmithKline reported a profit increase of 18% in its growing Indian market. On the contrary the company may need to cut costs as it faces intense competition from generic manufacturers.
Revenues decline 3% in the most recent quarter on a year over year basis, however the company does excels at managing performance. The company reported a profit margin and operating margin of 19% and 31%, respectively. 69% of profits are paid out as dividends; in 2011 Glaxo paid an annual dividend of $2.41, which current yields 5.4%.
Visa is a global leader payment technology company, which engages in the operation of retail electronic payments. The company is based in California, USA, however provides services in throughout the world. Shares are trading at its 52 week high of $117, as the company continues to deliver strong performance and sales figures. The company exceeded analyst expectations of $1.45 EPS and reported EPS of $1.49 or total earnings of $1 billion. Visa also authorized a $500 million share repurchase program.
Visa has performed extremely well in its most recent quarters; quarterly revenues are up 14%, earnings are up 16%. The company delivers an operating margin of 60% and a profit margin of 40%. In 2011, the company paid an annual dividend of $.74, which yields 0.60%, in total paying out 16% of earnings. Visa has no debt outstanding and $3 billion of cash on hand. Shares are currently trading at a trailing price to earnings ratio of 20.7.
Spectrum Pharmaceuticals is a biotech company which focuses on hematology and oncology. The company purchases, develops and commercializes late stage clinical and commercial drugs. Though shares reached their 52 week high of $16, they are now hovering around $15. The company has two FDA approved drugs, Fusilev and Zevalin. Fusilev has grown robustly, however Zevalin’s growth has been subject to regulations and bureaucracy. Shares surged as the FDA removed the major obstacle (bioscan), and cleared the way for wide use of the Zevalin, making access to the drug more convenient and cost efficient for patients. Analysts now anticipate share prices to reach $25.
Despite the limitations of one of its key drugs Spectrum has excelled. The company has reported a profit margin of 26% and operating margin of 31%. Revenue in the most recent quarter grew at 205%. The company has $17 thousand in total debt outstanding and $150 million of cash on hand. Shares are trading at a price to earnings multiple of 18.
In the previous weeks shares of Exelon (EXC, Financial), Humana Inc. (HUM, Financial), GlaxoSmithKline (GSK, Financial), Visa Inc (V, Financial) and Spectrum Pharmaceuticals (SPPI, Financial) have reached and exceeded their 52 week highs. Below, I’ll take a look at each.
With the recent approval of Exelon-Constellation merger by the Maryland Public Service Commission, Exelon, a large utilities company will increase its market cap by almost 33%. The company currently has a market cap of $26, whereas Constellation Energy Group has a market cap of just under $8 billion. As word of the approval hit the market, share prices reached its 52 week high of $45. Subsequently prices have fallen, and shares are currently priced near $39.
Exelon has strong fundamentals and like other utilities, the company pays an enticing dividend which provides investors with great stability through uncertain times and recessions. Shares are trading at a price to earnings multiple of 10.5, earns a profit (margin) of 13% and has grown earnings by 16% each quarter on a year over year basis. The annual dividend of $2.10 yields 5.3%; the company pays out 56% of earnings as dividends.
Humana is one of the largest healthcare providers in the United States. The company offers insurance products and health and wellness services to employer group. Despite failing to meet analyst expectations, shares of Humana recently reached its 52 week high of $96, however shares are now trading 8% lower at $89. Shares reached its high, upon the release of the fourth quarter earnings report. The company earned a profit which did meet analyst’s expectations, however on the contrary, the company expects EPS of $7.50-$7.70 compared to the analyst average of $8.00 of FY 2012.
Humana has still managed to grow revenue by 9% during the quarter on a year over year basis, earnings have grown 85%. The company is trading at a price to earnings multiple of 10.5, the company does have relatively poor profit margin and operating margin of 4% and 6%, respectively.
GlaxoSmithKline is a global leader in the development of pharmaceutical products, based in the United Kingdom. The company also develops over the counter medicines and health related consumer products for consumers worldwide. Shares recently reached their 52 week of high of $46, however fells have fell since and are currently trading near $45, as the company reported record growth in a major international market. GlaxoSmithKline reported a profit increase of 18% in its growing Indian market. On the contrary the company may need to cut costs as it faces intense competition from generic manufacturers.
Revenues decline 3% in the most recent quarter on a year over year basis, however the company does excels at managing performance. The company reported a profit margin and operating margin of 19% and 31%, respectively. 69% of profits are paid out as dividends; in 2011 Glaxo paid an annual dividend of $2.41, which current yields 5.4%.
Visa is a global leader payment technology company, which engages in the operation of retail electronic payments. The company is based in California, USA, however provides services in throughout the world. Shares are trading at its 52 week high of $117, as the company continues to deliver strong performance and sales figures. The company exceeded analyst expectations of $1.45 EPS and reported EPS of $1.49 or total earnings of $1 billion. Visa also authorized a $500 million share repurchase program.
Visa has performed extremely well in its most recent quarters; quarterly revenues are up 14%, earnings are up 16%. The company delivers an operating margin of 60% and a profit margin of 40%. In 2011, the company paid an annual dividend of $.74, which yields 0.60%, in total paying out 16% of earnings. Visa has no debt outstanding and $3 billion of cash on hand. Shares are currently trading at a trailing price to earnings ratio of 20.7.
Spectrum Pharmaceuticals is a biotech company which focuses on hematology and oncology. The company purchases, develops and commercializes late stage clinical and commercial drugs. Though shares reached their 52 week high of $16, they are now hovering around $15. The company has two FDA approved drugs, Fusilev and Zevalin. Fusilev has grown robustly, however Zevalin’s growth has been subject to regulations and bureaucracy. Shares surged as the FDA removed the major obstacle (bioscan), and cleared the way for wide use of the Zevalin, making access to the drug more convenient and cost efficient for patients. Analysts now anticipate share prices to reach $25.
Despite the limitations of one of its key drugs Spectrum has excelled. The company has reported a profit margin of 26% and operating margin of 31%. Revenue in the most recent quarter grew at 205%. The company has $17 thousand in total debt outstanding and $150 million of cash on hand. Shares are trading at a price to earnings multiple of 18.
