One of the best investment strategies (at least for me) over the past Twenty five years is to find ideas by perusing the brand new high lists each day.
A new high means someone, somewhere, has just paid a brand new level for any stock, one that has not been seen before. Thus, you realize at least one investor believes something great is happening at the company and is willing to repay in order to participate.
Like everything in the market, there isn\’t any guarantee, but a minimum of this can generate some new ideas, and also you know that you have some friends buying with you.
Companies hitting new highs these days might genuinely have something going for them, because of the fears of China crashing and, of course, the never-ending Greek saga.
Indeed,?the brand new high list gets shorter and shorter every single day because the markets have generally been weaker of late.
Let\’s take a look at five companies whose shares have hit new highs previously week. For shares to complete well within this environment, maybe something really good is going on at these five companies.
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AirBoss of America Corp. (BOS/TSX)
We recently started covering this company, which manufactures and sells rubber-based products for any wide variety of customers, such as the military, and it is shares are up 99.5 per cent this year.
It isn\’t cheap at 23x earnings, but good growth is anticipated and insiders own 27 percent of the company. Earnings per share increased by 27 percent in the first quarter.
Why is its fill up? Its June purchase of Immediate Response Technologies LLC looks good, its business (especially military orders) may not be too impacted by a recession, which is simply getting good attention.
Its balance sheet can also be fine, it\’s been profitable each year since 2003 and contains paid dividends since 2007.
Anacor Pharmaceuticals Inc. (ANAC/Nasdaq)
Anacor on Monday announced strong Phase III results for its Dermatitis drug trial, and also the stock surged. It\’s now up a lot more than 351 per cent in 2015, and many are saying its treatment is “best in class.” Most are also calling the organization a prime takeover candidate. Its one-year gain: 778.9 per cent.
Certainly, the sector is fraught with risks, but the biggest risk – that of a failed Phase III trial – has become out of the way. Watch for plenty of earnings and ratings upgrades on this one over the next couple weeks.
Prism Medical Inc. (PM/TSXV)
Prism makes and sells medical products needed by the mobility challenged. Of course, it has demographics in the favour, in addition to a four-per-cent dividend which has grown nicely in the last five years. The organization also paid a special dividend of $1 per share this season.
In addition to decent earnings and also the sale of the division, the stock has been doing well (up 44.5 per cent this year and 73.2 percent in 52 weeks) largely because Prism keeps buying back stock.
It did a sizable auction in 2014 to cancel 4.3 million shares and also the number of shares is now nearly half what it really was several years ago. Insiders own 25 per cent and it continued to hit new highs throughout the Greek crisis.
CCL Industries Inc. (CCL.B/TSX)
CCL, which makes specialty-packaging products for consumer products companies, is up 33.5 per cent this year and 54.5 percent over the past 52 weeks. Its smart a dividend of 0.9 per cent after being increased in February also it handily beat revenue and earnings estimates in the last quarter.
It is also not cheap at 21x earnings, but investors simply such as the stability of their business and its recently increased earnings growth rate. It is a large company (its market cap is near $6 billion) and there has likely been a lot of funds flowing in to the stock from investors selling large oil stocks and weak-performers such as Bombardier Inc.
Hardwoods Distribution Inc. (HWD/TSX)
Hardwoods wholesales lumber, plywood and related products, operating distribution centres throughout The united states. At 15x earnings, its stock is up 54.4 percent this year and 60.3 per cent over 52 weeks. It recently hit a number of new highs, but things really began to take off in May when it boosted its dividend by 22 per cent.
In addition to the dividend, its sales jumped 34 percent in the first quarter, and earnings rose 59 percent. A fairly small enterprise, with a $250-million market cap, investors see it as a leveraged ask the U.S. housing market recovery. It is likely also considered a takeover target for that sector.
As mentioned previously, a new high does not guarantee continued success. Most investors, however, will certainly affirm that they\’re way more fun than new lows.
Peter Hodson, CFA, is CEO of 5i Research Inc., a completely independent research network providing conflict-free advice to individual investors (www.5iresearch.ca).