The stocks in this article are all trading near their 52-week highs. This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. On that note, here is one stock with the fundamentals to back up its performance and two best left ignored.
Two Stocks to Sell:
GATX (GATX)
One-Month Return: +10.3%
Originally founded to ship beer, GATX (NYSE: GATX) provides leasing and management services for railcars and other transportation assets globally.
Why Does GATX Fall Short?
- Demand for its offerings was relatively low as its number of active railcars has underwhelmed
- Negative free cash flow raises questions about the return timeline for its investments
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
GATX’s stock price of $170.08 implies a valuation ratio of 18.5x forward P/E. Read our free research report to see why you should think twice about including GATX in your portfolio.
Installed Building Products (IBP)
One-Month Return: +27.6%
Founded in 1977, Installed Building Products (NYSE: IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.
Why Are We Wary of IBP?
- 3.5% annual revenue growth over the last two years was slower than its industrials peers
- Projected sales decline of 3.1% for the next 12 months points to a tough demand environment ahead
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 5.3% annually
Installed Building Products is trading at $263.39 per share, or 26.4x forward P/E. If you’re considering IBP for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Boston Scientific (BSX)
One-Month Return: -0.7%
Founded in 1979 with a mission to advance less-invasive medicine, Boston Scientific (NYSE: BSX) develops and manufactures medical devices used in minimally invasive procedures across cardiovascular, urological, neurological, and gastrointestinal specialties.
Why Is BSX on Our Radar?
- Core business can prosper without any help from acquisitions as its organic revenue growth averaged 15.6% over the past two years
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Additional sales over the last five years increased its profitability as the 18.4% annual growth in its earnings per share outpaced its revenue
At $105.75 per share, Boston Scientific trades at 34.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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