One area that I have identified as an area of opportunity for myself (and most investors) is identifying and considering stocks that have the potential to continue to reach new highs. That is because instinctively I want to do what we all want to do: buy low and sell high.
That said, the stocks in this article are not value stocks. They are not stocks that have price to earnings ratios in the single digits, or even below many stocks of the S&P. And they are not stocks that the amateur investor should consider. But these are stocks that investors are placing bets on because they are stocks that have the potential to run!
The first stock that has the potential to continue to make new 52-week highs is Sodastream International Ltd (NASDAQ:SODA). This company manufactures devices that turn water into soda. Varieties of syrups and fruit-flavored concentrates are available to create different flavors. Fairly recently, for example, SodaStream and Kraft foods entered into a partnership involving the use of the Crystal Light and Country Time brand flavors with the SodaStream system. This stock is currently trading at a price to earnings multiple of around 30, which might seem high. Except that this company is small enough that it could continue to grow revenues and earnings by more than 25% over the next few years. Plus this company is benefiting from sustainability campaigns in Europe as well as the controversy associated with the Super Bowl commercial. Overall, I feel that this company is well-positioned to benefit from trends and solid marketing.
On Assignment, Inc. (NYSE:ASGN)
The second stock that has the potential to continue to make new 52-week highs is On Assignment. This company is also trading at a fairly high price to earnings multiple of around 27. Like SodaStream, On Assignment is well-positioned to benefit from various trends, namely larger temp worker pools and an increased appetite for temporary workers. More and more companies are realizing that they need very specialized experience for a finite time period. In 2011 On Assignment acquired Vista and HealthCare Partners and in 2012 the company acquired Apex Systems. Those acquisitions are catalyzing growth. Over the past 5 years, On Assignment has grown Revenues at a yearly rate of more than 15% and Net Income by more than 17%. More recently, this past quarter Revenues increased by 139% (quarter vs. year ago quarter) and Net Income increased by 124% (quarter vs. year ago quarter). All in all, this company is on a terror and the underlying fundamentals suggest that this company is poised to continue to grow.