We recently compiled a list of the 14 Best 52-Week High Stocks To Buy According to Analysts. In this article, we are going to take a look at where Royalty Pharma plc (NASDAQ:RPRX) stands against the other stocks.
After two years of substantial gains to record highs, exhaustion in the US equity markets is slowly kicking in. Pullbacks in various sectors have come into play amid growing concerns about overstretched valuations. Likewise, the pullbacks have come on bond yields surging to levels not seen in two months, triggering a selloff in growth-oriented stocks.
The 10-year yield touching highs of 4.79% has once again triggered demand for bonds at the expense of stocks, given the yields on offer. Additionally, the surge in bond yields comes on stronger-than-expected jobs reports that cast doubt on further interest rate cuts. The stock market rallied to record highs last year amid expectations that the Fed will embark on an aggressive easing push that involves interest rate cuts.
A spike in inflation levels amid a resilient US job market has once again averted the prospects of the Fed aggressively cutting interest rates. Consequently, the global rise in bond yields around the globe is being driven by expectations of fewer than expected interest rate cuts.
READ ALSO: 10 Best Blue Chip Stocks to Buy for 2025 and Billionaire Israel Englander’s Top 10 Stock Picks Heading Into 2025.
“With the 10-year yield potentially getting to 5%, I think it’s going to be very hard for the equity market to really gain any meaningful traction here until there’s — at minimum — stability in interest rates,” said Adam Turnquist, chief technical strategist at LPL Financial.
The sentiments echo serious concerns about stocks trading at 52-week highs after blockbuster moves last year. Given that valuations at 52-week highs often appear overstretched, there are growing concerns that some of the stocks could be the subject of significant pullbacks. Amid the concerns, Turnquist does not see the prospect of the market edging into bear territory even though the market appears to be in a correction phase.
Analysts at Goldman Sachs are also bullish about the equity market’s outlook and believe there is not enough reason to back away from investing. Additionally, the analysts don’t expect 2025 to be a problematic year for equity investments.
“Valuations are not a good timing signal. … There’s no clear relationship between your starting valuation and the returns one year later,” Brett Nelson, head of tactical asset allocation for the group, said
Goldman Sachs analysts expect the US economy to grow faster than Europe in 2025. A resilient US economy amid high interest rates should fuel stellar financial results characterized by revenue and earnings growth.
“We do think that the earnings advantage that the U.S. has will continue,” said Sharmin Mossavar-Rahmani, chief investment officer for the Goldman unit.
The prospect of the US economy staying clear of recession even with the Fed leaving interest rates at current levels should offer much-needed support to stocks trading at all-time highs. Analysts also expect friendly regulations and deregulation from the upcoming Republican administration to act as a tailwind to fuel further gains in the equity markets.
Our Methodology
To make the list of best 52-week high stocks to buy according to analysts, we scanned various screeners focusing on stocks trading close to their 52-week highs. We then settled on stocks trading close to 52-week highs (0-10% below high), which analysts believe boast of 25% or more upside potential as of January 14, owing to their solid underlying fundamentals. Finally, we ranked the stocks in ascending order based on their upside potential.
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 scientist in a laboratory looking through a microscope, surrounded by petri dishes and beakers while researching new biopharmaceutical advances.
Royalty Pharma plc (NASDAQ:RPRX)
52 Week Range: $24.05 – $31.66
Current Share Price: $30.03
Stock Upside Potential: 45.33%
Number of Hedge Fund Holders: 33
Royalty Pharma plc (NASDAQ:RPRX) is a healthcare company that operates as a buyer of biopharmaceutical royalties and a financier of innovations in the biopharmaceutical industry. It is also involved in identifying, evaluating, and acquiring royalties on various bio-pharmaceutical therapies. After rallying by about 5% in 2024, the stock has started 2025 on a roll, rallying by about 17%.
According to analysts, amid the strong moves in the market, Royalty Pharma plc (NASDAQ:RPRX) is one of the best 52-week high stocks to buy. That’s partly due to the key achievements clocked in 2024, including about $2.8 billion in portfolio receipts. The company also achieved a 13% growth in royalty receipts. A confirmation that the company is on course to acquire its external manager, RP Management, for $1.1 billion, saving it more than $1.6 billion in ten years, should allow it to generate more shareholder value.
A resilient evaluation and acquisition of royalties has allowed Royalty Pharma plc (NASDAQ:RPRX) to generate significant cash flow to return value to shareholders. The stock continues to reward investors with a 2.93% dividend yield, having increased its quarterly payout by 5% to $0.22 a share.
Overall RPRX ranks 7th on our list of the best 52-week high stocks to buy according to analysts. While we acknowledge the potential of RPRX as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RPRX but 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.
