What's the secret sauce for the 24 ASX companies hitting 52-week highs in March?

Welcome back to the 52-week high series where we review the performance of previous stocks running into yearly highs and welcome some new names 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.

In my first edition to the series, I talked about why the 52-week high is a big deal. To recap:

• 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,” according to a research thesis by Thomas Goerge and Chuan-Yang Huang

• 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.

A different take

The 52-week high series has typically looked at how stocks that previously hit 52-week highs have performed. But this week, we’ll talk about something a little different. 

The global banking crisis triggered a broad-based selloff for markets, so as you can imagine, most stock charts look like a 45 degree dip followed by a little bounce (which is currently taking place).

Under this logic, there shouldn’t really be that many companies hitting 52-week highs.

And if they are hitting 52-week highs, then they must be doing so for extraordinary reasons.

Stocks making 52-week highs in March

Note: This list only references companies with a market cap of more than $300 million.

A little bit of a mess

In previous 52-week high lists, I could easily identify themes or sectors that are moving out. The most notable ones from previous lists were iron ore (China’s reopening) and insurance stocks (leveraged to higher interest rates). 

This time round, it’s a bit of a mess. 

• Materials: Alpha HPA, Adriatic Metals, Kingsgate, Resolute Mining

• Industrials: Auckland, Brambles, Dalrymple Bay Infrastructure, MMA Offshore, Washington H Soul Pattinson

• Tech: Data#3, Wisetech

• Discretionary: Myer, Seven Group, The Lottery Corp

• Healthcare: Neuren Pharma

• Financials: Hub24, QBE Insurance

• Staples: Inghams

• Takeover bids: Liontown Resources, Origin Energy, United Malt Group, Estia Health

If you look at the year-to-date performance of these stocks, it's incredibly strong, up 21.6% compared to the 1.2% of the ASX 200. (I’ve omitted the four takeover bids and Kingsgate Consolidated – As they completed a capital raising this week)

What do these stocks have in common?

From a fundamental perspective – Nothing really.

There’s a little bit of everything going on.

• Materials: Three gold and silver stocks plus Alpha HPA doing its own thing

• Industrials: Does this reflect a flight to quality assets with strong cash flows? These industries operate in sectors like airports, packaging, ports and marine services

• Tech: Wisetech is a tech darling and Data#3 posted record 1H23 earnings with a backlog of work due to “increased volume of business”

• Discretionary: Myer posted its highest profit in more than a decade

• Healthcare: Neuren’s been a powerful trending stock since Dec 21

• Financials: Hub24 kept rallying after 1H earnings

• Staples: Inghams also posted solid results and kept rallying post earnings

From a technical lens

The price charts of a lot of these companies share the same characteristics. That being: Low volatility, above the 200-day moving average and consolidating in a relatively tight price range.

Here are a few examples:

Alpha HPA chart (Source: TradingView)

Auckland International Airport chart (Source: TradingView)

Dalrymple Bay Infrastructure (Source: TradingView)

Data#3 chart (Source: TradingView)

Myer chart (Source: TradingView)

Neuren Pharma chart (Source: TradingView)

QBE chart (Source: TradingView)

These stocks have kind of just minded their own business. When the ASX 200 rallied in January – a lot of these names continued to trade sideways (or continue to trend higher). But at the same time, when the ASX 200 sold off in February through to March, they also held up relatively well.

These names would continue to hold key moving averages, price ranges and/or trendlines until a catalyst or high volume kicked in – prompting a breakout.