The stocks featured in this article have all approached their 52-week highs. When these price levels hit, it typically signals strong business execution, positive market sentiment, or significant industry tailwinds.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. Keeping that in mind, here are two stocks with the fundamentals to back up their performance and one best left ignored.
One-Month Return: +10.1%
Established in 2006, SolarEdge (NASDAQ: SEDG) creates advanced systems to improve the efficiency of solar panels.
Why Do We Avoid SEDG?
Number of megawatts shipped has disappointed over the past two years, indicating weak demand for its offerings
Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
SolarEdge is trading at $34.30 per share, or 1.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SEDG.
One-Month Return: +23.6%
Started by Stanford students Larry Page and Sergey Brin in a Menlo Park garage, Alphabet (NASDAQ:GOOGL) is the parent company of the eponymous Google Search engine, Google Cloud Platform, and YouTube.
Why Is GOOGL a Good Business?
Alphabet’s dominant Google Search sits on the pantheon of the best businesses ever. This is reflected in its robust long-term revenue growth and elite operating margin.
The company’s profit margins have become even higher over time, speaking to its scale advantages and operating efficiency not only in its core Search business but also in Google Cloud Platform and YouTube.
Revenue growth and increasing operating margins are the key ingredients for strong EPS growth. Google has these, and when also factoring in its share repurchases, you can see why EPS has exploded over the long term.
Alphabet’s stock price of $251.55 implies a valuation ratio of 26x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
One-Month Return: -3%
Founded in 2010, Warby Parker (NYSE:WRBY) designs, manufactures, and sells eyewear, including prescription glasses, sunglasses, and contact lenses, through its e-commerce platform and physical retail locations.
Why Are We Positive On WRBY?
Bold push to open new stores demonstrates an ambitious strategy to establish itself in underpenetrated territories
Collection of products is difficult to replicate at scale and results in a best-in-class gross margin of 54.9%
Earnings growth has massively outpaced its peers over the last three years as its EPS has compounded at 68.5% annually
