The stocks in this article are all trading near their 52-week highs. This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. All that said, here is one stock with lasting competitive advantages and two best left ignored.
Two Stocks to Sell:
Johnson Controls (JCI)
One-Month Return: +5.7%
Founded after patenting the electric room thermostat, Johnson Controls (NYSE: JCI) specializes in building products and technology solutions, including HVAC systems, fire and security systems, and energy storage.
Why Does JCI Worry Us?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Projected sales growth of 6.4% for the next 12 months suggests sluggish demand
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $140.92 per share, Johnson Controls trades at 28.3x forward P/E. Check out our free in-depth research report to learn more about why JCI doesn’t pass our bar.
Columbia Financial (CLBK)
One-Month Return: +3%
Founded during the Roaring Twenties in 1926 and headquartered in Fair Lawn, New Jersey, Columbia Financial (NASDAQ: CLBK) operates federally chartered savings banks in New Jersey that offer traditional banking services including loans, deposits, and insurance products.
Why Do We Think Twice About CLBK?
- Net interest income was flat over the last five years, indicating it’s failed to expand this cycle
- Weak unit economics are reflected in its net interest margin of 2.1%, one of the worst among bank companies
- Sales over the last five years were less profitable as its earnings per share fell by 3.8% annually while its revenue was flat
Columbia Financial’s stock price of $18.06 implies a valuation ratio of 1.5x forward P/B. Read our free research report to see why you should think twice about including CLBK in your portfolio.
One Stock to Watch:
BNY (BK)
One-Month Return: +16.6%
Tracing its roots back to 1784 when it was founded by Alexander Hamilton, BNY (NYSE: BK) is a global financial institution that provides asset servicing, wealth management, and investment services to institutions, corporations, and high-net-worth individuals.
Why Are We Positive On BK?
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Annual tangible book value per share growth of 21.5% over the past two years was outstanding, reflecting strong capital accumulation this cycle
BNY is trading at $135.70 per share, or 15.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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