We recently compiled a list of the 14 Best 52-Week High Stocks to Buy According to Short Sellers. In this article, we are going to take a look at where AbbVie Inc (NYSE:ABBV) stands against the other 52-week high stocks.
The U.S. stock market has been on a roll, with major indices clocking double-digit gains even with the U.S. economy showing signs of weakness. The gains have come from investors shrugging off the uncertainty around the U.S. presidential election and monetary policy to continue betting on various counters.
Consequently, the S&P 500 is already up more than 17% for the year, driven by gains in the communication services and financial services sectors. Likewise, technology stocks have also contributed to driving the overall market high as investors continue paying close attention to some of the big plays around artificial intelligence.
READ ALSO: 18 Best 52-Week Low Stocks to Buy Now According to Short Sellers and Top 10 ADR Stocks To Buy According to Hedge Funds.
The tech-heavy NASDAQ index, which gained 18% for the year, comes on growing expectations that the U.S. Federal Reserve has hit the peak of its monetary policy tightening spree. With expectations that the central bank will start cutting interest rates by as much as 50 basis points, according to CNBC, investors’ sentiments around tech stocks have improved significantly for September.
Investors remain optimistic about the stock market outlook heading into year end because of the positive impact of low interest rates. The Fed’s cutting interest rates will result in a significant drop in borrowing costs, which bodes well for capital-intensive businesses looking to access cheap capital.
The central bank aims to achieve a soft landing for the economy. In this situation, inflation must return to the 2% goal without the U.S. economy sliding into a downturn. If the central bank reduces interest rates prematurely, it faces the danger of a severe surge in inflation. Conversely, if it reduces rates too late, it might cause a severe recession.
While interest rate cuts are expected to offer a much-needed boost, disappointing earnings, and lackluster guidance could curtail market gains, especially for the best 52-week high stocks to buy, according to short sellers.
Several companies are under immense pressure after their valuation skyrocketed amid the artificial intelligence frenzy. Consequently, any concerns about slow earnings and revenue growth should send jitters, triggering significant pullbacks.
Adam Turnquist, the head of technical strategy at LPL Financial, mentioned that the S&P 500 typically experiences about three annual declines of at least 5%. On average, it has seen around one 10% decline each year.
“Expressing this data another way, 94% of years since 1928 have experienced a pullback of at least 5%, and 64% of years have had at least one 10% correction,” Turnquist said, according to USA Today. “We believe that how common these occurrences are should provide comfort to equity investors, allowing them to be patient.”
Looking forward to the rest of the year, experts predict that the best 52-week high stocks to buy, according to short sellers, could keep rising, but they caution about the dangers of premium valuations.
At the same time, financial experts believe that although economic expansion will slow down in the next few months, they don’t see a situation that could cause a recession.
Our Methodology
To compile the list of the best 52-week high stocks to buy now, according to short sellers, we first screened for stocks that were trading near their 52-week highs (0-10% range) using the Finviz stock screener. Next, we looked at their short interest and picked the stocks with the lowest short interest that were the most popular among elite hedge funds. The stocks are ranked in descending order based on their short interest.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A pharmacist handing out a pharmaceutical drug to a patient in a drug store or chemist.
AbbVie Inc (NYSE:ABBV)
52 Week Range: $135.85 – $198.30
Current Share Price: $195.18
Short interest rate: 1.14%
Number of Hedge Fund Holders: 67
AbbVie Inc (NYSE:ABBV) is a healthcare company that develops, manufactures, and sells pharmaceutical products worldwide. It is one of the biggest drug makers, best known for Humira, an injection for autoimmune and intestinal Behcet’s disease. It also offers Rinvoq for treating rheumatoid and psoriatic arthritis.
It is one of the best 52-week high stocks to buy, according to short sellers, owing to its strong pipeline of drugs and strategic acquisitions that continue to strengthen its long-term prospects and growth metrics. The European Commission’s approval of TEPKINYL, the company’s novel treatment for adult patients with follicular lymphoma, is one of the factors driving the stock higher.
In addition to strengthening its drug pipeline, AbbVie Inc (NYSE:ABBV) has acquired Cerevel therapeutics, significantly expanding its neuroscience portfolio. With the acquisition, the company gains access to treatments for conditions such as schizophrenia and Parkinson’s disease.
The company delivered solid second-quarter results, which were attributed to the significant momentum of the ex-Humira growth platform, continued investments in the business, and pipeline progress. Consequently, the company is well-positioned to deliver our top-tier long-term outlook.
Revenues in the quarter were up 4.3% to $14.46 billion, as diluted earnings per share dropped 32% to $0.77 a share. Even though there was a significant drop in earnings, the business has shown earnings growth of 4.31% each quarter, suggesting a possible recovery in its sales path. Moreover, the company maintains a robust gross profit margin of 69.66%, highlighting its skill in controlling expenses.
AbbVie Inc (NYSE:ABBV) is trading at a forward price to earnings growth of 18 and offering a 3.18% dividend yield. Insider Monkey’s analysis of 912 hedge fund portfolios shows that 67 hedge funds reported owning stakes in AbbVie Inc (NYSE:ABBV) as of the end of the June quarter.
Polen Focus Growth Strategy made the following comment about AbbVie Inc. (NYSE:ABBV) in its Q2 2024 investor letter:
“In the second quarter, the top relative contributors to the Portfolio’s performance were all names we do not hold: Home Depot, Meta Platforms, and AbbVie Inc. (NYSE:ABBV). AbbVie fell on the back of results that failed to allay concerns around continuing biosimilar threats to its very large, blockbuster arthritis drug, Humira, which went off patent last year.”
Overall ABBV ranks 10th on our list of the best 52-week high stocks to buy according to short sellers. While we acknowledge the potential of ABBV as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
