3 companies at 52-week highs – will they rise further?

Not so long ago, companies at 52-week highs were thin on the ground with the ASX plunging and taking most shares with it.

Now that things have turned around, plenty of new companies are reaching new heights and, as ever, the most difficult thing to do is establish whether a company is going to keep growing, or if it’s reached its peak more on speculation than fundamentals.

As a company gets bigger and better its performance will inevitably be reflected in a string of new and higher 52-week highs.

Equally, most investors have made the mistake of buying into a company at a 52-week high only to watch the shares fall in the following months.

Caltex Australia Limited (ASX: CTX) – last traded at $30.30, up 62.93% for the year

Caltex continues to rise as investors buy into the hope of constant revenues and falling costs following the closure of Kurnell Refinery.

With this closure, Caltex has reduced its onshore refining capability to just one refinery, transitioning to more of a retailing model and relying on long-term supply agreements with US partner Chevron.

While it is a promising development that should see costs reduced and increase overall performance, I am uncomfortable with Caltex’s increased vulnerability to competition, a weaker US dollar, and market factors outside its control.

While I expect Caltex may trade a higher in light of falling costs and higher investor expectations, ultimately I think it is approaching a peak and the company is not a long-term growth story.

Sonic Healthcare Limited (ASX: SHL) – last traded at $18.41, up 18.32% for the year

The situation is substantially different for Sonic Healthcare, whose shares have soared 8% since the announcement of a major contract in Alberta, Canada.

It will be the global corporation’s first entry into Canada and the long term potential of entering a new market is phenomenal, considering Sonic’s prior success record throughout the US, Australia, and Europe.

Further the contract, worth CAD$200m every year equates to an increase in revenue of roughly 5%, which is nothing to sneeze at.

Combine this with the potential to scope out competitors and potential acquisitions ‘on the ground’ and Sonic continues to look like a long term winner.

Newzulu Ltd (ASX: NWZ) – last traded at $0.18, up 190% for the year

Newzulu – formerly PIEnetworks – is a recent entry to the ASX and has significant potential to disrupt the way global news is reported.

Combine crowd-sourced journalism with the potential for instant-upload via mobile phone and it’s not hard to see how this could be the next step in reporting, with to-the-minute coverage on events around the world.

Newzulu already has partnerships with many major news agencies around the world, and today’s acquisition of company Filemobile Inc looks set to only further the company’s reach by bringing a rich collection of new clients (USA Today, Fox News, Wall Street Journal among others) to the table.

Given that it is still a highly speculative investment with low turnover it is literally impossible to predict where Newzulu’s share price will head next.

Based on the recent cycle of announcements (and price spikes) followed by ambivalence (and price falls) I wouldn’t be surprised to see the company head lower over the next few weeks before leaping speculatively on the next positive announcement.

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Motley Fool contributor Sean O'Neill owns shares in Newzulu Ltd.

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