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How to Find 'Strong Buy' Stocks Trading Near Highs in October

The stock market bounced back in the first two days of fourth quarter trading after a brutal end to the third period that saw the S&P 500 finish roughly 25% lower. Many of the same uncertainties remain, but investors have pushed 10-year U.S. Treasury yields back down to 3.6% from 4% on the hopes that the Fed will be able to cool inflation, alongside speculation about slowing economic growth and a flight to safety.

Some on Wall Street might be racing to buy a short-term dip in the hopes to cash in on another possible short-lived bear market rally. Many successful long-term investors are also likely utilizing the downturn and the broader negative market sentiment as opportunities to buy their favorite stocks and ETFs at serious discounts to hold for years to come.

With the heart of third quarter earnings season set to begin in the middle of October and September’s CPI data due out on Oct. 13, the market might not have to wait too much longer for an even clearer picture of everything. Depending on how things shake out, the market might be able to extend its solid start to the fourth quarter.

Some might still be nervous to start buying stocks again that have been largely crushed this year. Thankfully, many stocks and a few pockets of the market are performing well in 2022.

Let’s explore a Zacks screen that helps us find ‘Strong Buy’ stocks that have managed to climb in 2022 to trade near their 52-week highs to start the fourth quarter.

Don't Be Afraid of New Highs

Some investors might prefer not to buy stocks at new highs. But if somebody asked you what the best stocks in your portfolio are, it’s likely you would name the stocks moving up the most.

The most basic idea is that the winners in your portfolio are the ones going up. If a stock is underperforming the market or going down, you'll quickly identify it as one of your worst holdings. Therefore, it makes sense that some of these stocks will be reaching new highs along the way.

Many investors are hesitant to buy stocks making new 52-week highs. But there really isn’t any reason to be. Some may worry that they have already missed the mark at that point, or that now it has more room to fall. Still, a stock making a new 52-week high is a ‘good thing,’ just as one falling to a new 52-week low is a ‘bad thing.’

On top of that, would the person who doesn’t want to buy stocks making new highs be upset if a stock they owned broke out to a new 52-week high? Statistics have also shown that stocks making new highs have a tendency of making even higher highs. And aren’t these the stocks we all dream about?

Now obviously, the fundamentals need to be there, and you should try to keep an eye on valuations. But if you were in a stock making new highs and cheering it on, it seems odd to be afraid of one doing the same just because you haven't bought it yet.

Think about this: A stock just made a new-52 week high, which is great news. Guess what? Last year it made a new 52-week high as well. And the year before that. And the year before that. Can you imagine all the money you'd be leaving on the table if you were afraid of being in stocks every time they made a new high?


• Current Price/52-Week High greater than or equal to .80

• Percent Change in Price over 12 Weeks greater than 0

• Percent Change in Price over 4 Weeks greater than 0

• Zacks Rank equal to 1

• Price/Sales Ratio less than or equal to Industry Median

• P/E (using F1 Estimates) less than or equal to Industry Median

• Projected One Year EPS Growth F(1)/F(0) greater than or equal to Industry Median

• Current Avg. 20-Day Volume greater than Previous Week's Avg. 20-Day Volume

• All of the above parameters are applied to stocks with a Price greater than or equal to $5 and an Average 20-Day Volume of greater than or equal to 100,000 shares.

• Percent Change in Price over 12 Weeks + Percent Change in Price over 4 Weeks equal to Top # 5

Here is one of the stocks that made it through the screen today…

TravelCenters of America TA

TravelCenters of America operates a wide-ranging portfolio of travel-focused convenience stores, as well as fuel centers, truck repair and maintenance service locations, restaurants, and beyond. Covid took a big chunk out of TA’s business, but it has already crushed its pre-covid levels when it comes to total revenue, having brought in $7.34 billion in FY21 sales vs. $6.12 billion in 2019. TravelCenters of America is benefitting from higher gas prices and the return of normal travel patterns.

Zacks estimates call for TravelCenters of America to post another 43% revenue growth in FY21 to reach $10.50 billion to help boost its bottom-line by 97%. The company also provided upbeat guidance last quarter that helped analysts boost their FY23 EPS guidance, with its current Zacks consensus up 28% in the last 60 days alone. TravelCenters of America has also crushed our bottom-line estimates in the trailing four quarters.

TravelCenters of America shares have soared 167% in the last two years, including a 12% climb in 2022 to crush the market and industry. Despite the run, TA shares still trade 15% below their current average Zacks price target.

Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.

Click here to sign up for a free trial to the Research Wizard today.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.

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