As the third-quarter earnings season gets underway, the market remains volatile and unpredictable. With war breaking out in the Middle East and bond yields remaining elevated, equities have been gyrating lately.
However, within this environment, there are several stocks that are trading at 52-week highs and fast approaching all-time highs. While some of these names are obvious, others might surprise you.
Some lesser known stocks that don’t get a lot of media attention have quietly outperformed this year, rising steadily to hit new highs. Investors looking to add some winners to bolster their portfolio should consider a position in one of these securities. Here are seven hidden gems that are headed towards all-time highs.
Lululemon Athletica (LULU)
Shares of athletic apparel maker Lululemon Athletica (NASDAQ:LULU) are at a 52-week high and heading towards an all-time high on news that the company’s stock is being added to the S&P 500 index on Oct. 18.
The addition to the S&P 500 should prove to be a big catalyst for the stock as it means that index funds and mutual funds that track the performance of the benchmark S&P 500 will have to buy LULU stock going forward.
Lululemon’s share price rose 10% on news that its being added to the S&P 500. The leg higher brings the stock’s year-to-date gain to 30%, and its five-year increase to 204%.
Even before that news broke, LULU stock had been riding high this year driven by strong financial results. In September, the company reported that its fiscal second-quarter profit rose 18% from a year earlier—due largely to increased sales in China.
The strong Q2 results led the company to revise up its full-year guidance, saying it now expects its sales to be between $9.51 billion and $9.57 billion, and its profits are expected to be between $12.02 and $12.17 per share.
Shell (SHEL)
Also sitting at a 52-week high and flirting with an all-time high is oil producer Shell (NYSE:SHEL). With crude oil prices now trading above $85 a barrel after war broke out in the Middle East, threatening to disrupt production, SHEL stock is again riding high.
The company’s share price is up 22% this year and has now gained 33% over the last 12 months. After reporting record profits in 2022 as crude prices peaked at $122 a barrel, the company had been struggling as oil fell back below $70 a barrel this past summer. But now, the company’s fortunes look to be revived.
In its most recent financial results, Shell reported a 56% decline in its Q2 profit to $5 billion due to the fall in crude oil prices. The earnings missed Wall Street forecasts and caused SHEL stock to weaken. In Q2 2022, Shell announced record quarterly earnings of $11.5 billion. And in this year’s first quarter, the company reported a profit of nearly $10 billion.
But now, SHEL stock has perked up like Popeye after eating a can of spinach. Shell also announced over the summer that it would repurchase $3 billion of its own stock and raise its quarterly dividend to 33 cents a share.
News Corp. (NWSA)
News Corp. (NASDAQ:NWSA), the media conglomerate owned by Rupert Murdoch that runs Fox News and specialty TV channels such as A&E and the History channel, among other media properties, is seeing its stock nearing an all-time high on reports that an activist shareholder has built a big stake in the company.
Multiple media reports say that Starboard Value, an activist hedge fund, has bought a sizable amount of NWSA stock. The move by Starboard is seen as likely to result in calls for change at Murdoch’s media company. Exactly how big Starboard’s stake is remains unknown.
However, in the past, Starboard Value has run proxy fights and agitated for change at companies such as Salesforce (NYSE:CRM) and Darden Restaurants (NYSE:DRI). Media reports state that Starboard began building its stake in News Corp during the summer, before Murdoch, age 92, announced on Sept. 21 that he is stepping down as chairman of the company and handing control to his son Lachlan.
Another activist investor, Irenic Capital Management, last year lobbied News Corp to spin-off Dow Jones, the publisher of the Wall Street Journal newspaper. The Murdoch family controls 39% of News Corp’s voting shares.
NWSA stock is up 35% over the last 12 months.
Alphabet (GOOG/GOOGL)
Shares of Alphabet (NASDAQ:GOOG/NASDAQ:GOOGL) have been rallying in recent weeks and are now at a 52-week high and closing in on their all-time peak. The company, which is a leading player in artificial intelligence (AI), has seen its share price rally 56% so far in 2023.
This brings GOOGL stock’s five-year gain to 152%. The company’s shares are breaking out on expectations that Alphabet will cement its leadership in AI with its upcoming Q3 financial results. The company has been pulling out all the stops to integrate AI into its various products and technologies.
From Gmail to the Pixel smartphone and Google home assistants, Alphabet is cascading generative AI across its products in an effort to boost its position in the red hot field and lift its revenues. The code red concerning AI that was issued by the company’s CEO Sundar Pichai earlier this year appears to be paying off.
While AI hasn’t made a significant impact on Alphabet’s financial results yet, that is expected to change in coming quarters as the company not only spreads its AI offerings but begins to monetize them as well. After falling sharply during the 2022 tech wreck, GOOGL stock looks to be back.
Williams-Sonoma (WSM)
While not back to the all-time high it hit in November 2021, the share price of furniture and kitchen ware retailer Williams-Sonoma (NYSE:WSM) is cruising in the right direction and currently at a 52-week high. Year-to-date, WSM stock has risen 42%, bringing its five-year gain to 175%.
The share price has been ripping higher lately following news that investment firm Green Equity Investors IX has increased its passive stake in the company’s stock. Reports say that Green Equity has grown its passive stake in Williams-Sonoma to 5%. A passive stake refers to an investment made without the intention of influencing or taking control of a company’s management team.
The rise in WSM stock comes despite the company reporting mixed Q2 financial results. The company’s profits beat Wall Street forecasts, but revenues missed the mark. Williams-Sonoma blamed the soft Q2 print on a decline in consumer spending and increased spending on promotional items.
The company’s cash and cash equivalents did rise in Q2 to $514 million compared with $367 million a year earlier. Williams-Sonoma forecasts mid-to-high single-digit annual revenue growth and an operating margin above 15% over the long-term.
Aflac (AFL)
Now trading at an all-time high are shares of supplemental insurance company Aflac Inc. (NYSE:AFL). The company’s stock has increased 36% over the last 12 months and is up 83% over five years.
The growth comes amid a broader rally in securities of insurance companies right now, and is also due to strong quarterly prints. The company most recently reported earnings per share of $1.58, beating Wall Street forecasts for $1.42. Revenues came in at $5.17 billion for the quarter ended June 2023, also beating analyst expectations.
Aflac also pays a healthy dividend to its shareholders. The dividend is currently set at 42 cents per share each quarter, giving it a yield of 2.07%. And, despite sitting at an all-time high following a big move higher, AFL stock still looks to be affordable, trading at 10 times future earnings.
Aflac has proven itself to be a consistent long-term winner for investors. Since the 2008-09 financial crisis, AFL stock has increased more than 650%. Much of the company’s growth comes from Asia as it gets 70% of its annual revenue from Japan.
Meta Platforms (META)
Closing in on a 52-week high and speeding towards an all-time high are shares of tech giant Meta Platforms (NASDAQ:META). The company’s stock has been a hands down winner this year, having gained 158% since January.
Few other stocks have risen as far as fast as Meta Platforms. The share price appreciation comes after the company undertook aggressive cost-cutting measures at the start of 2023 and then pivoted its focus to AI in the spring. Most recently, the company has unveiled a host of new products that have investors and analysts excited.
At its developer conference held at the end of September, Meta Platforms unveiled a brand new virtual reality (VR) headset and several AI applications that should drive sales well into 2024 and beyond. Meta CEO Mark Zuckerberg officially unveiled the Quest 3 VR headset, which just went on sale priced at $499.
The company also unveiled several generative AI chatbots and announced a new version of its Ray-Ban mixed reality smart glasses that can capture photographs and videos with a voice command. The company has moved well beyond its social media platforms such as Facebook.
— Joel Baglole
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Source: Investor Place