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number cruncher

Peter Ashton is vice-president of retail and self-directed investing at Recognia Inc.

What are we looking for?

High-flying U.S. stocks that may be set for a fall.

With the S&P 500 closing at a new all-time high on Aug. 27, many market watchers are now wondering whether some stocks have moved too far, too fast. Propelled by a wave of good news on housing and employment, one in six U.S. stocks is now up 20 per cent or more year-to-date. With the Fed's quantitative easing program set to end in October, one might think that many of these stocks are vulnerable to a pullback.

The screen

We will be using Recognia Strategy Builder to search for U.S. stocks which may be getting overstretched.

We begin by setting a minimum market capitalization threshold of $5-billion to focus on larger, more established companies in the market. Next, we will look for companies that are trading within 2.5 per cent of their 52-week highs. We will also specify stocks with prices that are up by at least 30 per cent year-to-date.

Finally, in order to select stocks showing signs of being overstretched, we will limit our search to stocks that are trading above their 21-day, 50-day and 200-day moving averages.

More about Recognia

Recognia is a global leader in quantitative and technical analysis. It is accessible by more than 20 million investors and traders worldwide through leading retail online brokers. Recognia covers 85 exchanges worldwide, and analyzes 65,000 instruments daily including stocks, indexes, exchange-traded funds, currencies and futures.

What did we find?

Keurig Green Mountain ranks No. 1 on our screen, having moved up more than 80 per cent already this year. In addition to providing more than 100 types of coffee, the company also owns Keurig, which manufactures the popular single cup coffee brewing system. In May, Coca-Cola announced it was raising its stake in Kurig Green Mountain to 16 per cent.

InterMune is a U.S. biotech company focusing on drug therapies for pulmonary diseases. The company is up almost 400 per cent year-to-date due to its acquisition by Swiss pharmaceutical giant Roche in August at a price of $74 (U.S.) per share. The company will likely trade in a narrow range until the merger is finalized.

Tim Hortons is a special case in our screen's results. After trading in a narrow range for most of 2014, the stock jumped by more than 19 per cent on Aug. 25 when it was announced the company would be acquired by Burger King Worldwide. The company will most likely trade in tandem with Burger King stock until the merger is completed.

With a market cap of $172-billion, Intel is the largest company on our screen. The company is up by more than 40 per cent since March and is trading well above its 21-day, 50-day and 200-day moving averages.

Netflix stock has had an amazing run, increasing more than 650 per cent in the past two years alone. As the largest and most successful over-the-top streaming video provider, Netflix is now attracting new competitors. This week, Rogers Communications and Shaw Communications announced a rival streaming service called Shomi.

The investment ideas presented here are for information only. Investors should conduct further research before investing.

High-flying U.S. stocks

RankCompanyTickerMarket Cap. (US$-bil)YTD % price chg% chg from 52-wk high
1Keurig Green Mountain Inc.GMCR-Q21.880.8%-0.3%
2InterMune Inc.ITMN-Q7.9395.5%-0.3%
3U.S. Steel Corp.X-N5.633.9%-0.2%
4Actavis PLCACT-N59.935.5%-1.3%
5Tim Hortons Inc.THI-N9.938.8%-1.4%
6Gilead Sciences Inc.GILD-Q162.441.5%-2.3%
7Harman Int'l Ind. Inc.HAR-N7.941.7%-2.2%
8Intel Corp.INTC-Q172.334.1%-1.1%
9Netflix Inc.NFLX-Q28.930.2%-1.2%
10Whiting Petro. Corp.WLL-N10.847.3%-1.1%
11Medivation Inc.MDVN-Q6.838.9%-0.7%
12Howard Hughes Corp.HHC-N6.332.8%-0.7%
13Community Health Sys. Inc.CYH-N6.034.7%-0.2%