Although the investing adage goes “let your winners run,” sometimes you have to “take the money and run,” and that’s the story here with stocks to sell at 52-week highs.
Over the past twelve months, many stocks have experienced incredible run-ups in price. Much of this has to do with market trends, such as the sudden popularity of AI stocks. Or, as a result of improving macro factors, including cooling inflation and the possibility of lower interest rates.
However, there are also stocks that have been top performers, primarily because of company-specific developments that have shifted sentiment from bearish or “on the fence” to fully bullish.
Yet while some of these big winners could keep on winning in 2024, this is not universal. Prime examples are these three stocks to sell at 52-week highs. Each one has become relatively pricey, and at risk of coughing back their respective gains from the past year.
Anheuser-Busch Inbev (BUD)
Anheuser-Busch Inbev (NYSE:BUD) tanked after last year’s Bud Lite controversy, but shares in the brewing giant have bounced back in a big way since the fall. Initially, because of investors appreciating the fact that growth with other brands/markets helped to counter the negative of falling Bud Lite sales.
More recently, by the latest indication that the controversy has fully entered the rear-view mirror. Yet while those who bought the bottom with BUD stock are up nearly 27% in their positions, it’s questionable whether further near-term upside remains. Why? A new risk has emerged.
With the company’s union contract with the Teamsters coming due by month’s end, within weeks thousands of Anheuser-Busch employees could hit the picket lines. As Seeking Alpha reported Jan. 17, this could potentially cause the BUD comeback to hit a wall. Considering the potential reversal of shares, now is the time to sell.
General Electric (GE)
Like BUD, General Electric (NYSE:GE) is another old-school “blue chip” that has made a comeback. In fact, the industrial conglomerate’s shares have made a far more spectacular comeback, rising by 68.68% over the past twelve months.
Why has GE stock gone from fallen angel to market darling? Improved fiscal results, for one. In addition, the market has re-rated GE based upon its breakup value, as its final spinoff (of its power and renewable energy business) and transformation into an aerospace pure play is just months away.
However, with shares (as of this writing) hitting a new 52-week high, now may be when you hit the “sell” button. Shares could be at risk of a post-spinoff sell-off. GE’s current valuation (30 times forward earnings) may be less than that of Boeing (NYSE:BA) the valuations of both companies hinge on the post-Covid aerospace recovery carrying on through 2025.
Snowflake (NYSE:SNOW) shares have soared by over 36% over the past twelve months and have continued to hit new 52-week highs. Yet while the market for now remains very bullish on this cloud infrastructure company, since the start of 2024, a growing number of analysts have started to lay out the bear case.
In a nutshell, sell-siders taking a more bearish stance on SNOW stock argue that its overvalued, and not simply because the stock sports a triple-digit forward price-to-earnings ratio. In the view of Barclays’ Raimo Lenschow, shares are overvalued given competitive risks, and uncertainty about future growth.
Per Monness, Crespi Hardt’s Brian White, “AI hype” has pushed Snowflake into overvalued territory. The analyst questions whether the company (which is experiencing growth deceleration) actually has a bona fide generative AI catalyst. Before more market participants come to a similar conclusion, sell SNOW.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.