7 S&P 500 Stocks Hit 52-Week Highs On Tuesday

A short list of new highs is heavily concentrated in one part of the market.

CrowdStrike (CRWD), with a market value of about $266.7 billion, is the largest name on today's list of stocks at their highest price of the past year. As of Tuesday, September 29, there are 7 S&P 500 stocks trading at their 52-week highs.

The list is dominated by a single area of the market. Health Care accounts for 5 of the 7 names, while the S&P 500 itself has returned -0.4% over the last month. Does this narrow strength point to a durable trend or just an isolated pocket of gains?

The Full List, Largest First

Here are all 7 names, sorted by market capitalization, with returns over four windows:

Which new high is built on a stronger foundation?

Two names from the Information Technology sector show how different the businesses can look behind a 52-week high. NetApp (NTAP) trades at 28.9 times trailing earnings, and its revenue grew 12.2% over the last twelve months, and its operating margin was 26.0%.

Compare that to Waters (WAT), which trades at 262.0 times trailing earnings (on trailing earnings that include at least one loss quarter, so the multiple is not comparable to a clean-year multiple). Its revenue grew 52.5% over the last twelve months, and its operating margin was 8.2%.

A 52-week high is a starting point, not a conclusion.

A list of stocks at their yearly highs is a useful screen for strength. But a price is not a verdict on a business. The disciplined next step is always the same: to look past the stock chart and check whether the company's growth and margins can support the new, higher valuation.

A new high tells you what the market already believes. The harder question is which of these runs management itself is underwriting. Our Guidance Momentum screen tracks exactly that: stocks where the company raised its own forward numbers.

One more pattern worth noticing: 5 of the 7 names are Health Care stocks. When a whole group is making new highs together, a health care ETF like XLV, which holds 3 of these names, is one way to own part of the group's strength without betting on which single name leads it from here.

Chasing Highs Is A Reflex. Owning Strength Is A System

A 52-week-high list is seductive: everything on it has been going right. But buying a stock because it is at its high is buying a price, and prices revert; what persists is the quality underneath the run.

The Trefis High Quality (HQ) Portfolio is built to own that quality before and after it makes headlines: roughly 30 businesses selected for consistent cash generation, strong margins, and resilient balance sheets, sized and rebalanced with rules. It has a track record of outpacing a benchmark that combines the S&P 500, the S&P MidCap 400, and the Russell 2000. Admire the list; own the system.