CHICAGO, Feb. 23, 2011 /PRNewswire/ -- Stocks in this week's article include: Aetna Inc. (NYSE: AET), The Andersons, Inc. (NASDAQ: ANDE), Arch Chemicals, Inc. (NYSE: ARJ), LDK Solar Co., Ltd. (NYSE: LDK) and Metalico, Inc. (AMEX: MEA). Kevin Matras talks about stocks making new highs and why you shouldn't be afraid to buy them.
Screen of the Week written by Kevin Matras of Zacks Investment Research:
Today I'm going over a simple screen with a powerful concept: Buying stocks making new highs.
I know some are reluctant to buy stocks making new 52-week highs. If you're one of them, have you ever asked yourself why?
If a stock is making a new 52-week high, that's a good thing. I'm pretty sure that a person who dislikes buying stocks making new 52-weeks highs wouldn't be too upset if a stock he already owned broke out to new 52-week highs. And why should he? Statistics have shown that stocks making new highs have a tendency of making even higher highs.
These are the stocks we all dream about being in. Get in and it keeps going up.
Of course the fundamentals need to be there. And you should keep a watchful eye on valuations. But if you were in a stock making new highs and cheering it on, it seems silly to be afraid of one doing the same just because you haven't bought it.
One question I like asking myself just to put things into perspective is: if I was in it, would I be excited and would I still want to be in it? If the answer is yes, then I'll look for the best opportunity to get in. If the answer is no, I'd want to take profits and then move on.
This topic actually reminds me of a question someone asked me a while ago about a stock I was talking about that was at a new 52-week high. In fact, it was at a new 5-year high.
He said, "aren't you worried about buying stocks at a 52-week high?" I said of course not. So it just made a new-52 week high. That's 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?
The screen I'm running today looks for…
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