We recently compiled a list of the 14 Best 52-Week High Stocks to Buy According to Short Sellers. In this article, we are going to take a look at where AstraZeneca PLC (NASDAQ:AZN) stands against the other 52-week high stocks.
The U.S. stock market has been on a roll, with major indices clocking double-digit gains even with the U.S. economy showing signs of weakness. The gains have come from investors shrugging off the uncertainty around the U.S. presidential election and monetary policy to continue betting on various counters.
Consequently, the S&P 500 is already up more than 17% for the year, driven by gains in the communication services and financial services sectors. Likewise, technology stocks have also contributed to driving the overall market high as investors continue paying close attention to some of the big plays around artificial intelligence.
READ ALSO: 18 Best 52-Week Low Stocks to Buy Now According to Short Sellers and Top 10 ADR Stocks To Buy According to Hedge Funds.
The tech-heavy NASDAQ index, which gained 18% for the year, comes on growing expectations that the U.S. Federal Reserve has hit the peak of its monetary policy tightening spree. With expectations that the central bank will start cutting interest rates by as much as 50 basis points, according to CNBC, investors’ sentiments around tech stocks have improved significantly for September.
Investors remain optimistic about the stock market outlook heading into year end because of the positive impact of low interest rates. The Fed’s cutting interest rates will result in a significant drop in borrowing costs, which bodes well for capital-intensive businesses looking to access cheap capital.
The central bank aims to achieve a soft landing for the economy. In this situation, inflation must return to the 2% goal without the U.S. economy sliding into a downturn. If the central bank reduces interest rates prematurely, it faces the danger of a severe surge in inflation. Conversely, if it reduces rates too late, it might cause a severe recession.
While interest rate cuts are expected to offer a much-needed boost, disappointing earnings, and lackluster guidance could curtail market gains, especially for the best 52-week high stocks to buy, according to short sellers.
Several companies are under immense pressure after their valuation skyrocketed amid the artificial intelligence frenzy. Consequently, any concerns about slow earnings and revenue growth should send jitters, triggering significant pullbacks.
Adam Turnquist, the head of technical strategy at LPL Financial, mentioned that the S&P 500 typically experiences about three annual declines of at least 5%. On average, it has seen around one 10% decline each year.
“Expressing this data another way, 94% of years since 1928 have experienced a pullback of at least 5%, and 64% of years have had at least one 10% correction,” Turnquist said, according to USA Today. “We believe that how common these occurrences are should provide comfort to equity investors, allowing them to be patient.”
Looking forward to the rest of the year, experts predict that the best 52-week high stocks to buy, according to short sellers, could keep rising, but they caution about the dangers of premium valuations.
At the same time, financial experts believe that although economic expansion will slow down in the next few months, they don’t see a situation that could cause a recession.
Our Methodology
To compile the list of the best 52-week high stocks to buy now, according to short sellers, we first screened for stocks that were trading near their 52-week highs (0-10% range) using the Finviz stock screener. Next, we looked at their short interest and picked the stocks with the lowest short interest that were the most popular among elite hedge funds. The stocks are ranked in descending order based on their short interest.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A pharmacy worker distributing prescription medicines to patientsreceiving treatment for oncology, cardiovascular, renal, metabolism and respiratory diseases.
AstraZeneca PLC (NASDAQ:AZN)
52 Week Range: $60.47 – $87.55
Current Share Price: $87.45
Short interest rate: 0.27%
Number of Hedge Fund Holders: 49
Headquartered in Cambridge, the United Kingdom, AstraZeneca PLC (NASDAQ:AZN) is a biopharmaceutical company focusing on discovering, developing, and commercializing prescription medicines. The company boasts of a diversified product portfolio that includes 12 blockbuster medicines with sales exceeding $1 billion in number of indications.
It remains one of the best 52-week high stocks to buy, according to short sellers, given that the new products it has launched in recent years have done well. Additionally, the company has made strategic acquisitions to strengthen its product portfolio and competitive advantage. The investments have been the catalyst behind the company’s organic revenue growth rate of 10.45% over the past 12 months.
Oncology remains AstraZeneca PLC (NASDAQ:AZN)’s biggest segment and a key driver of value. Consequently, it has been enhancing its cancer treatment offerings by expanding the indications for current drugs and advancing its pipeline of cancer therapy candidates. Cancer treatments account for approximately 40% of AstraZeneca’s overall revenues, with a 17% increase in 2021, a 19% rise in 2022, and a 21% growth expected in 2023.
AstraZeneca PLC (NASDAQ:AZN) is also advancing rapidly into various fields such as heart health, immune system research, and uncommon illnesses. A notable achievement includes the approval of Voydeya, a medication for managing hemolysis outside of the blood vessels in adults suffering from the rare condition known as paroxysmal nocturnal hemoglobinuria (PNH).
The stock trades at 19 forward earnings, lower than the industry average of 20.58, implying potential undervaluation even on trading near 52-week highs. AstraZeneca PLC (NASDAQ:AZN) comes with a 1.70% dividend yield, ideal for income-focused investors. The company has been paying dividends for 32 consecutive years, affirming its commitment to shareholder value.
As of the second quarter, the stock is held by 49 hedge funds, which amounts to almost $2.33 billion. Fisher Asset Management is the largest investor in the company and has shares worth $776.47 million as of June 30.
In its Q2 2024 investor letter, Baron Health Care Fund commented on AstraZeneca PLC (NASDAQ:AZN):
“Performance in pharmaceuticals and health care distributors was bolstered by solid gains from AstraZeneca PLC (NASDAQ:AZN) and McKesson Corporation, respectively. AstraZeneca is a global biopharmaceutical company with a focus on three main therapy areas based on its core competencies: oncology, cardiovascular and metabolic diseases, and respiratory illnesses. AstraZeneca’s shares increased given incremental positive news flow (LAURA, ADRIATIC, and DESTINY-Breast06 clinical trials) surrounding the oncology franchise. The company also published long-term guidance for the first time, projecting $80 billion in revenue by 2030, or 75% higher than 2023’s $45.8 billion. This projection implies an annual growth rate of 8% over seven years, compared with the 5% to 7% targets set by GSK and Johnson & Johnson and the 5% target set by Novartis.”
Overall AZN ranks 2nd on our list of the best 52-week high stocks to buy according to short sellers. While we acknowledge the potential of AZN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.