5 Growth Stocks Near 52-Week Highs To Beat The Downslide

The U.S. stock market closed on a disappointing note yesterday, extending a losing streak for the market as investors seem to be edgy about the Fed’s decision to put short-term interest rates on hold for now. This decision largely reflects Fed’s insight into the slow economic growth in the nation; which in turn might lead to reduced stock market returns.

The “Brexit” – possible exit of Britain from the European Union through the Jun 23 referendum – episode has also kept investors on tenterhooks. Although this plausible departure will largely hurt Britain and the rest of Europe, the repercussions might not spare the world economy at large.

Apart from these, the volatility in the oil market along with other macroeconomic woes caused the 34.65 point decline in the Dow Jones industrial average, 3.82 point drop in the S&P 500 index and the 8.62 point fall in the Nasdaq composite.

Target the High

In such a situation, when even a slightest change in the stock market can cause an upheaval across the world, it is wise to put in money into stocks that are already near the high end of their growth trajectory. More precisely, we may focus on the stocks nearing their 52-week highs to beat the current market downturn.

Growth Investing: The Ideal Strategy

However, selecting stocks near their 52-week highs might not be an ideal investment strategy alone. This is where the importance of growth investing comes in.

To rake in maximum profits amid the current mayhem, investors should likely choose stocks that are fundamentally sound. Growth stocks come into play here with a commendable historical earnings growth rate, forward earnings growth rate and solid return-on-equity (ROE) that highlight the stock’s potential to garner high profits in the near future as well.

5 Winning Picks

We hereby select five top-performing stocks that bear a Zacks Rank #1 (Strong Buy), a Growth Style Score of ‘A’, price as a percentage of 52-Week high-low range > 95, for which current year’s estimated EPS growth >=20% and ROE >10.

These growth stocks made a strong start to 2016, even as the global market was reeling under the effect of a string of adverse factors. They also exhibit strong fundamentals that make them attractive investment options for the long term.

B&G Foods Inc. (NYSE:BGS) : New Jersey-based B&G Foods manufactures, sells and distributes a range of shelf-stable, and frozen food and household products in the United States, Canada, and Puerto Rico. The company’s ROE is 20.96 and estimated EPS growth for the current year is pegged at 38.8%, higher than the industry average of 9.3%. The company closed at $45.40 yesterday, near its 52-week high price of $46.11.

Globant S.A. (NYSE:GLOB) : Luxembourg-based Globant is a software developer with a ROE of 20.51. Currently, the company’s estimated EPS growth for the current year is 22%. The company closed at $39.60 yesterday, near its 52-week high price of $41.23.

Insperity, Inc. (NYSE:NSP) : Texas-based Insperity provides an array of human resources and business solutions to small and medium-sized businesses. It has a ROE of 39.95 while its estimated EPS growth for the current year stands at 66.3%, higher than the industry average of 17.2%. The company closed at $74.58 yesterday, close to its 52-week high price of $75.79.

Netgear Inc. ( (NASDAQ:NTGR) ): CA-based Netgear offers networking products to consumers, businesses and service providers. It has a ROE of 39.95 and estimated EPS growth for the current year of 26.8%, which is higher than the industry average of 12.1%. The company closed at $46.40 yesterday, near its 52-week high price of $47.24.

Dave & Buster's Entertainment, Inc. ( (NASDAQ:PLAY) ): This Texas-based company owns and operates entertainment and dining venues for adults and families in North America. It has a ROE of 22.46. Currently, the company’s estimated EPS growth for the current year is pegged at 29.2%, higher than the industry average of 10.4%. The company closed at $47.17 yesterday, in close proximity to its 52-week high price of $48.79.

Bottom Line

Amid the widespread uncertainty plaguing the investment space, it would be rather foolish to spend money in stocks that witnessed a hike out of sheer fluke. Instead, go for stocks like those mentioned above, which are currently hitting their high and already possess strong fundamentals, being the perfectly safe bets for growth investment.