While the rally over the past few days has helped many stocks rise, a number of blue chip shares including the major banks, the major miners, Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) all remain close to their 52-week lows.
In contrast, there are a handful of stocks which have bucked the trend to hit fresh 52-week highs this week…
- BlueScope Steel Limited (ASX: BSL) touched $5.95
- Fortescue Metals Group Limited (ASX: FMG) hit $3.29
- Iress Ltd (ASX: IRE) climbed to $11.49 which is an all-time high
- Mayne Pharma Group Ltd (ASX: MYX) rallied to $1.46 which is also an all-time high
Despite hitting new highs, arguably these four stocks could still have more upside ahead and prove to be better investment candidates than other more beaten-up stocks such as the banks.
In the case of both BlueScope and Fortescue, these two stocks are recovering after enormous multi-year declines in their share prices.
That certainly doesn't mean shareholders will ever see those record highs again, however even after rallying to fresh 52-week highs these two stocks still remain valued by the market at a fraction of what they once were.
In fact, based on analyst consensus data, BlueScope and Fortescue are trading on forward price-to-earnings (PE) ratios of 15.6x and 17x. This could turn out to be cheap if we have now passed the bottom of the cycle for these two cyclical companies. (Source: Thomson Consensus Estimates).
In comparison, Iress and Mayne have both hit new all-time highs as investors bet that these two businesses will continue to grow their revenues and earnings at a solid rate. Given these two companies operate in appealing growth industries and sell products which are growing in demand, the market's view could definitely be well founded.
