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 Intuitive Surgical, Inc. (NASDAQ:ISRG) 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 medical team performing minimally invasive surgery with a da Vinci Surgical System.
Intuitive Surgical, Inc. (NASDAQ:ISRG)
52 Week Range: $481.25 – $491.56
Current Share Price: $487.17
Short interest rate: 1.05%
Number of Hedge Fund Holders: 67
Intuitive Surgical, Inc. (NASDAQ:ISRG) is a healthcare company that develops, manufactures, and sells products that enable physicians and healthcare providers to enhance access to minimally invasive care. It offers the da Vinci Surgical System, which enables complex surgery using a minimally invasive approach.
According to short sellers, the global technology leader in robotic-assisted minimally invasive surgery is one of the best 52-week high stocks to buy. It is poised for growth in the coming quarters, courtesy of its strength in robotics. Last year, the unit recorded a 14% increase in revenues, attributed to rising demand for its instruments and accessories for minimally invasive procedures.
Intuitive Surgical, Inc. (NASDAQ:ISRG) increasingly benefits from the transition towards less invasive procedures, driving up the need for its da Vinci robotic surgical systems. A favorable expansion forecast, backed by strong basic characteristics, provides a favorable environment for assessing any potential investment.
In the second quarter, the company surpassed 9,800 installed systems. The number of systems used increased by 14% annually in the quarter, indicating a strong growth trend. This is because the majority of installations are either new or add-ons rather than replacing existing systems. Its adjusted EPS of $1.78 surpassed consensus estimates of $1.54 on revenues increasing 14.2% to $2 billion.
Growth in procedure volume, higher price realization for procedures, and increased system placements are expected to propel the company’s revenue in the future. At the same time, the introduction of Intuitive Surgical, Inc. (NASDAQ:ISRG)’s newest robotic system, the da Vinci 5, showed a high interest in the company’s latest offering. After the da Vinci 5 was introduced in March, the company installed 70 units in the second quarter, significantly increasing from the eight units installed in the first quarter.
In the second quarter, 67 hedge funds held long positions in Intuitive Surgical, Inc. (NASDAQ:ISRG), with a combined stake value of $6.4 billion.
Here is what Baron Funds said about Intuitive Surgical, Inc. (NASDAQ:ISRG) in its second-quarter 2024 investor letter:
“Intuitive Surgical, Inc. (NASDAQ:ISRG) manufactures the da Vinci Surgical System, a robotic surgical system used for minimally invasive procedures. The stock performed well due to excitement about the company’s new robotic surgical system, the da Vinci 5, which offers enhanced imaging, force feedback, and other improvements. We continue to believe Intuitive has durable competitive advantages and will remain the market leader in robotic surgery. We think the company has a long runway for growth as more procedures are performed with the company’s equipment.”
Overall ISRG ranks 9th on our list of the best 52-week high stocks to buy according to short sellers. While we acknowledge the potential of ISRG 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.