Stocks that are trading at or around 52-week highs present investors with a special choice.
If they are already shareholders, do they lighten up a bit on their position and take some profits, or do they do nothing?
If they do not own the stock, then they have to decide if they’ve missed the boat or if there is big upside still.
In this article, I will discuss two stocks that are trading at or around 52-week highs after an impressive few years and where we can expect them to go from here.
Badger Daylighting (TSX:BAD)
This provider of non-destruction excavating services deploys its Badger Hydrovac technology in its work with clients from a wide range of infrastructure industries, such as oil and gas, utilities, and other large infrastructure facilities in North America.
In the first nine months of 2018, revenue increased 20%, adjusted EBITDA increased 25%, and cash flow from operations increased by 27%.
Badger has enjoyed a 15.5% 10-year compound annual revenue growth rate, EBITDA margins of between 25% and 30%, and continues to benefit from a solid balance sheet, thus giving it the flexibility to continue to grow organically and via acquisitions.
Trading at 21 times this year’s expected earnings with an expected 37% increase in EPS, this stock is still a steal.
Kirkland Lake Gold (TSX:KL)(NYSE:KL)
$7.4 billion Kirkland Gold is achieving production and financial momentum, as it surpasses 2018 production targets and achieves better-than-expected EPS and cash flow numbers.
With mines in Canada and Australia, Kirkland represents a lower-risk way to play the gold space.
Gold stocks such as Kirkland remain a good place to be in an environment where geopolitical risk is high, investors are looking for a safe haven, and when the U.S. dollar is showing weakness.
In late 2011, gold prices peaked at close to $1,900 per ounce then retreated steadily to levels of just over $1,000 per ounce at the end of 2015. Prices are currently $1,330 per ounce.
Gold companies including Kirkland have worked hard at reducing costs and improving balance sheets, which leaves them well positioned to reap the rewards of rising gold prices.
This is a high-quality stock that has shown operational excellence and that can be expected to continue to see strong production growth, decreasing costs, and a rising dividend.
In conclusion
The two stocks discussed here that are trading at 52-week highs can be expected to continue ahead strongly. The only issue might be that the market in general has really outperformed this year and might be due for a breather.
Lightening up just a little if you are a shareholder and waiting to add on market weakness is a good strategy for these two names.
