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Find 'Strong Buy' Stocks Trading Near Highs in August

The stock market was nearly flat on Monday and it appeared as though there might not be much movement up or down until July’s consumer price index data dropped Wednesday morning. Some of the selling, did however, pick up through morning trading Tuesday, driven by growth-focused technology stocks.

Wall Street had been buying stocks since the middle of June as 10-year U.S. Treasury yields started to slip off their highs. Until the July jobs release Friday morning there was a growing sense that the Fed’s aggressive rate hikes and their continued hawkish tone were doing the job, with the 10-year down to around 2.67% last Thursday from its 3.5% peak in mid-June.

The hot jobs report saw the U.S. economy add 528,000 jobs in July to blow away projections and take payrolls back to their pre-pandemic levels and send the unemployment rate to 50-year lows. The impressive showing might force the Fed to raise its core interest rate at yet another high clip at its next meeting in late September.  

Nearly every area of the economy posted job growth last month, including in more economically-sensitive areas such as construction and manufacturing. The strength and resilience are not really what Wall Street wanted to see as it makes it harder for the Fed to tackle 40-year high inflation.

There are, of course, many areas of the market performing well in 2022. Let’s explore a Zacks screen that helps us find ‘Strong Buy’ stocks that are climbing to near 52-week highs in the face of growing uncertainty.

Don't Be Afraid of New Highs

Some investors might prefer not to buy stocks at new highs. But if somebody asked you what the best stocks in your portfolio are, it’s likely you would name the stocks moving up the most.

The most basic idea is that the winners in your portfolio are the ones going up. If a stock is underperforming the market or going down, you'll quickly identify it as one of your worst holdings. Therefore, it makes sense that some of these stocks will be reaching new highs along the way.

Many investors are hesitant to buy stocks making new 52-week highs. But there really isn’t any reason to be. Some may worry that they have already missed the mark at that point, or that now it has more room to fall. Still, a stock making a new 52-week high is a ‘good thing,’ just as one falling to a new 52-week low is a ‘bad thing.’

On top of that, would the person who doesn’t want to buy stocks making new highs be upset if a stock they owned broke out to a new 52-week high? Statistics have also shown that stocks making new highs have a tendency of making even higher highs. And aren’t these the stocks we all dream about?

Now obviously, the fundamentals need to be there, and you should try to keep an eye on valuations. But if you were in a stock making new highs and cheering it on, it seems odd to be afraid of one doing the same just because you haven't bought it yet.

Think about this: A stock just made a new-52 week high, which is great news. Guess what? Last year it made a new 52-week high as well. And the year before that. And the year before that. Can you imagine all the money you'd be leaving on the table if you were afraid of being in stocks every time they made a new high?

Parameters

• Current Price/52-Week High greater than or equal to .80

• Percent Change in Price over 12 Weeks greater than 0

• Percent Change in Price over 4 Weeks greater than 0

• Zacks Rank equal to 1

• Price/Sales Ratio less than or equal to Industry Median

• P/E (using F1 Estimates) less than or equal to Industry Median

• Projected One Year EPS Growth F(1)/F(0) greater than or equal to Industry Median

• Current Avg. 20-Day Volume greater than Previous Week's Avg. 20-Day Volume

• All of the above parameters are applied to stocks with a Price greater than or equal to $5 and an Average 20-Day Volume of greater than or equal to 100,000 shares.

• Percent Change in Price over 12 Weeks + Percent Change in Price over 4 Weeks equal to Top # 5

Here are two of the five stocks that made it through today’s screen…

Canadian Solar Inc. CSIQ

Canadian Solar is one of the world’s largest solar technology and renewable energy companies. CSIQ is a leading manufacturer of solar photovoltaic modules. The company is also a provider of solar energy and battery storage solutions and a developer of utility-scale solar power and battery storage projects. Canadian Solar’s revenue soared 51% last year and Zacks estimates call for it to climb another 41% in 2022 to lift its adjusted earnings by 170% to $3.06 per share.

Canadian Solar is projected to post another 12.5% sales growth in 2023 and 67% higher earnings. The company is set to benefit from the larger renewable energy push, with solar set to play a much bigger role in the energy ecosystem going forward. CSIQ shares have surged 28% in 2022 to hover near their 52-week highs. Plus, Canadian Solar’s current Zacks consensus price target marks 22% upside to the roughly $40 per share it trades at right now.

Covenant Logistics Group CVLG

Covenant Logistics Group offers a portfolio of transportation and logistics services. CVLG’s services include asset-based expedited, dedicated and irregular route truckload capacity, alongside asset-light warehousing, transportation management, and freight brokerage capability. Covenant Logistics topped our Q2 earnings and revenue estimates on July 25 and raised its guidance for both FY22 and FY23.

CVLG’s consensus FY22 estimate is up 14% since its report, with fiscal 2023’s figure 12% higher. Covenant Logistics is part of an industry that currently ranks in the top 9% of all Zacks industries and it pays a dividend. CVLG shares have climbed 45% in the last 12 months and 22% in 2022. This performance includes a 48% surge higher in the past three months alone.

Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.


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