7 stocks making 52-week highs: Insurance and iron ore show strength

Welcome back to the 52-week high series where we review the performance of previous runners and welcome some new companies to the list.

Market Index’s 52-week high scan shows users which companies are making 52-week highs on the given day – it also happens to be one of our most popular pages.

To recap why hitting a 52-week high is a big deal: 

• A research thesis by Thomas J George and Chuan-Yang Huang, which examines the performance of stocks based on nearness to 52-week highs from 1963 to 2001 found the “closer a stock’s current price is to its 52-week high, the stronger the stock performs in the subsequent period.”

• 1851 Capital Chief Investment Officer Chris Stott says his fund ‘follows the data religiously’ to help identify which stocks have the momentum to keep making fresh highs and generate fresh ideas

• US trader Mark Minervini says “when you see a growing number of names in a particular industry making new 52-week highs (especially coming off a market low), this could be an indication that a group advance is underway.”

Stocks that made 52-week highs

Note: The list only includes +$1bn market cap companies, performance since 52-week high uses February 2nd as a reference point

Key takeaways

Earnings season volatility: Most stocks on our 52-week high list delivered softer-than-expected earnings and/or a cautious guidance, resulting in a sharp pullback in share price between February 2-22. Earnings season can at times be a coinflip for companies and evidently, even those with strong share price performances can fail to live up to expectations.

Insurance showing strength: The list noted three insurance names (QBE, Suncorp and IAG) making 52-week highs earlier this month. Not only did they continue to push higher, but broadly speaking, posted solid results with strong guidance.

Stocks making 52-week highs

Note: These are stocks that hit 52-week highs on Tuesday, 21 February

Interesting observations

Insurance strength: QBE has rallied 4.9% since its earnings (February 17th). Both Suncorp and IAG have held up relatively well amid broader market weakness. Insurance is a sector that's leveraged to the rising rate environment as they can earn higher yields on their fixed income portfolios.

Iron ore: Fortescue rallied to all-time highs on Tuesday as iron ore prices briefly rallied to US$140 a tonne. Rio Tinto and BHP are also within 5% of recent highs.

Earnings season winners: Hub24, Ridley and Super Retail Group all rallied on solid results.  Can these companies find more upside now that earnings risk is out of the way?