Investors generally consider a stock's 52-week high a good criterion for an entry or exit point. Stocks touching new 52-week highs are often predisposed to profit-taking, resulting in pullbacks and trend reversals. 

Moreover, given the high price, investors often wonder if the stock is overpriced. While the speculation is not absolutely baseless, not all stocks hitting a 52-week high are necessarily overpriced.

Investors might lose out on top gainers in an attempt to avoid the steep prices.

Stocks such as Flowserve (FLS Quick QuoteFLS - Free Report) , Zions Bancorporation (ZION Quick QuoteZION - Free Report) , Astronics (ATRO Quick QuoteATRO - Free Report) and CommScope (COMM Quick QuoteCOMM - Free Report) are expected to maintain their momentum and keep scaling new highs. More information on a stock is necessary to determine whether there is scope for further upside.

Here, we discuss a strategy to find the right stocks. The technique borrows from the basics of momentum investing and bets on “buy high, sell higher.”

52-Week High: A Good Indicator

Many times, stocks that hit a 52-week high fail to scale higher despite having potential. This is because investors fear that the stocks are overvalued and expect the price to crash.

Overvaluation is natural for most of these stocks as investors’ focus (or willingness to pay the premium) has helped them reach this level. But that does not always indicate an impending decline. Factors such as robust sales, surging profit levels, earnings growth prospects and strategic acquisitions, which encouraged investors to bet on these stocks, could keep them motivated if there are no tangible negatives. In other words, the momentum might continue.

Also, when a string of positive developments dominates the market, investors find their underreaction unwarranted, even if there are no company-specific driving forces.

Setting the Right Filters

We ran a screen to zero in on 52-week high stocks (trading near the high level) that hold tremendous upside potential. The screen includes parameters to shortlist stocks with strong earnings growth expectations, sturdy value metrics and price momentum.

Moreover, the screen filters stocks that are relatively undervalued compared to their peers in terms of earnings and sales, ensuring the continuation of their rally for some time.

Current Price/52 Week High >= .80: This is the ratio between the current price and the highest price at which the stock has traded in the past 52 weeks. A value greater than 0.8 implies the stock is trading within 20% of its 52-week high range.

% Change Price – 4 Weeks > 0: This ensures that the stock price has moved north over the past four weeks.

% Change Price – 12 Weeks > 0: This metric guarantees a continued upward price momentum for the stock over the past three months as well.

Price/Sales <= XIndMed: The lower, the better.

P/E using F(1) Estimate <= XIndMed: This metric measures the amount an investor puts into a company to obtain one dollar of earnings. It narrows down the list of stocks to those that are undervalued compared to the industry.

One-Year EPS Growth F(1)/F(0) >= XIndMed: This helps choose stocks that have higher growth rates than the industry. This is a meaningful indicator, as decent earnings growth adds to investor optimism.

Zacks Rank =1: No screening is complete without the Zacks Rank, which has proved its worth since its inception. It is a fundamental truth that stocks with a Zacks Rank #1 (Strong Buy) have always managed to brave adversities and beat the market average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Current Price >= 5: This parameter will help screen stocks that are trading at $5 or higher.

Volume – 20 days (shares) >= 100000: The inclusion of this metric ensures that there is a substantial volume of shares, so trading is easier.

Here are our four picks out of the 22 stocks that made it through the screen:

Flowserve is benefiting from strength across its segments. The Flowserve Pump Division unit is particularly strong, driven by solid momentum in the aftermarket business. The increase in bookings across general industries and oil & gas end markets is aiding the Flow Control Division’s performance. Strength across end markets, along with Flowserve's Diversify, Decarbonize and Digitize (3D) strategy, is driving its booking levels. The company expects significant chemical capacity additions in the Middle East and modest improvement in overall global chemical demand in the quarters ahead. Solid booking level in the power generation market is being driven by the growth in data center capacity and increasing Artificial Intelligence activity. 

The Zacks Consensus Estimate for FLS’ 2025 earnings has moved north by 0.9% to $3.37 per share in the past 30 days. The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average surprise being 5.54%.

Zions Bancorporation is a diversified financial service provider, operating a widespread network of more than 400 branches. Zions has been opportunistically repurchasing shares. In February, the company approved a plan authorizing the buyback of up to $40 million worth of shares for 2025, which was completed in the first quarter. It intends to repurchase shares cautiously until it has further regulatory clarity on capital norms. As of June 30, 2025, Zions’ common equity tier 1 capital ratio was 11%, up from 10.6% in the prior-year period. The company’s solid balance sheet and robust liquidity continue to underpin its financial stability and enhance shareholder value. It holds long-term issuer ratings of BBB+ from both Standard & Poor's and Fitch Ratings, and Baa2 from Moody’s Investors Service. 

The Zacks Consensus Estimate for ZION’s 2025 earnings has remained steady at $5.78 per share in the past 30 days. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.1%.

Astronics has been gaining momentum as global defense and commercial aerospace activity continues to expand. In the second quarter of 2025, its Aerospace unit’s sales reached a record $193.6 million, nearly 9% higher than last year, driven by growth in both commercial transport market sales and military aircraft sales, with the drivers being increased demand for cabin power products from airlines as well as heightened demand for light and safety products from military businesses. On the other hand, the International Air Transport Association expects air travel demand to increase 5.8% year over year in 2025. No doubt, in line with this expected air passenger growth, airlines will continue to invest in improving cabin power access and enhancing in-flight connectivity, which, in turn, should serve as a key growth catalyst for ATRO.

The Zacks Consensus Estimate for ATRO’s 2025 earnings has remained steady at $1.60 per share in the past 30 days. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 78.54%.

CommScope continues to benefit from stringent cost-cutting measures and a focus on core operations. The company is actively pruning its non-core businesses while focusing on inorganic growth to boost its portfolio strength and remain at the forefront of technological innovation by developing solutions to support wireline and wireless network convergence. It has completed the divestiture of its Home Networks business to Vantiva SA (formerly Technicolor SA) to focus more on core operations. CommScope has further strengthened its portfolio by acquiring Casa Systems' Cable Business assets. The acquisition enhanced CommScope’s market-leading position in Access Network Solutions. Moreover, the company has revolutionized the way network operators scale their operations by launching the HX6-611-6WH/B antenna, which provides a high-capacity microwave backhaul solution to meet future network demands.

The Zacks Consensus Estimate for COMM’s 2025 earnings has moved south by 0.8% to $1.29 per share in the past 30 days. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 98.3%.

Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.
    
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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/.