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This is article reviews five stocks that have recently hit new 52 week highs and analyzes whether these stocks can keep surging even higher. When considering whether to invest in any stock, it is important to understand what is driving the stock price to new heights; is the buying interest triggered by strong company fundamentals, solid earnings growth or market rumor and sentiment?

Erie Indemnity Co (NASDAQ:ERIE)

Erie Indemnity Co has a market cap of $4.33 billion and a price to earnings ratio of 27.42. Its 52 week trading range is $58.51 to $81.41. At the time of writing, it is trading at around $79. It reported second quarter earnings 2011 of $1.25 billion, a decrease from first quarter earnings of $1.37 billion. Second quarter net income was $52 million, an increase from first quarter net income of $44 million. It has quarterly revenue growth of 35.90%, a return on equity of 11.36% and pays a dividend with a yield of 2.60%.

One of Erie Indemnity Company’s closest competitors is Arthur J Gallagher & Co (NYSE:AJG). Arthur J Gallagher is trading at around $30 and has a market cap of $3.41 billion. It has a price to earnings ratio of 20.97, quarterly revenue growth of 21.50% and a return on equity of 13.41%. It pays a dividend with a yield of 4.30%. Based on these key performance indicators, both companies are performing on par.

Erie Indemnity Company’s second quarter 2011 balance sheet showed cash of $996.10 million, an increase from first quarter cash of $913.30 million. It had net tangible assets in the second quarter of -$432.50 million, a decrease from first quarter net tangible assets of -$268.30 million. Its quarterly revenue growth of 35.90%, versus an industry average of 6.20%, and a return on equity of 11.36% versus an industry average of 12.60%, shows that it is outperforming many of its competitors.

Erie Indemnity has increased both its net income and cash holdings in a difficult operating environment, and when this is considered in conjunction with the relatively positive industry outlook and the company’s solid performance indicators, the increased investor interest in the company is understandable. Accordingly, I rate Erie Indemnity as a buy.

ProAssurance Corporation (NYSE:PRA)

The ProAssurance Corporation has a market cap of $2.39 billion and a price to earnings ratio of 9.55. For a 52 week period, its trading range has been $57.79 to $79.47. It is currently trading at around $78. The company reported second quarter earnings for 2011 as $174.83 million, an increase from first quarter earnings of $173.59illion. Second quarter net income was $55.10 million, an increase from first quarter net income of $47.69 million. It has quarterly revenue growth of 8.30%, and a return on equity of 13.61%. It currently pays a dividend with a yield of 0.70%.

One of ProAssurance Corporation’s closest competitors is Berkshire Hathaway Inc (NYSE:BRK.A). Berkshire Hathaway currently trades at around $115,739 and has a market cap of $191.81 billion. It has quarterly revenue growth of 20.70%, a return on equity of 8.11% and doesn’t pay a dividend. Based on these performance indicators, Berkshire Hathaway has a stronger future income indicator, although its return on equity is less than ProAssurance.

ProAssurance Corporation’s cash position has improved, its second quarter 2011 balance sheet showed $47.90 million in cash, an increase from $41.18 million in the first quarter. Its quarterly revenue growth of 8.30% is greater than the industry average of 2.70%, and its return on equity of 13.61% is greater than the industry average of 7.90%. Based on these performance indicators, it is outperforming many of its competitors.

The earnings outlook for the Property and Casualty Insurance industry is subdued. Conning Research and Consulting has stated:

Personal lines premiums are benefiting from rate growth, while commercial lines continue to show softness, and will lag the economic recovery.

This can be attributed to the fact that commercial lines generate a greater proportion of earnings for insurers and as a result of the poor economic climate, many businesses are cutting costs by seeking cheaper insurance policies or carrying the risk themselves.

However, ProAssurance has grown net income in a difficult operating environment, and when this is considered in conjunction with its solid performance indicators, the recent investor interest in the company can be understood. Accordingly, I rate ProAssurance as a buy.

Tractor Supply Company (NASDAQ:TSCO)

Tractor Supply Company has a market cap of $5.12 billion with a price to earnings ratio of 26.41. For a 52 week period, its trading range has been $39.91 to $74.51. It is currently trading at around $72. The company reported second quarter earnings 2011 as $1.18 billion, an increase from first quarter earnings of $836.58 million. Second quarter net income was $91.16 million, a substantial increase from first quarter net income of $18.34 million. The company is achieving quarterly revenue growth of 17.90%, has a return on equity of 22.70% and pays a dividend with a yield of 0.70%.

One of Tractor Supply’s closest competitors is The Home Depot, Inc (NYSE:HD). The Home Depot is currently trading at around $36. It has a market cap of $56.22 billion and a price to earnings ratio of 16.19. It has quarterly revenue growth of 4.20%, a return on equity of 19.09%, and pays a dividend with a yield of 2.80%. Based on these performance indicators, Tractor Supply is outperforming The Home Depot.

The Tractor Supply Company’s cash position has improved, its second quarter 2011 balance sheet showed $207.39 million in cash, an increase from $140.45 million in the first quarter. Tractor Supply’s quarterly revenue growth of 17.90%, versus the industry average of 5.90%, and a return on equity of 22.70%, versus an industry average of 12.70%, indicates that the company is outperforming many of its competitors.

The earnings growth outlook for the Specialty Retail Industry is subdued, due to the poor economic outlook and negative consumer sentiment, although there are some signs of an uplift in the industry outlook for 2012. Regardless of the negative industry and economic outlook, The Tractor Supply Company has substantially increased net income and cash holdings in the second quarter 2011, and when this is combined with its solid performance indicators, I can understand the recent investor interest in the company. On this basis, I rate the company as a buy.

Kimberly-Clark Corporation (NYSE:KMB)

Kimberly-Clark has a market cap of $27.20 billion and a price to earnings ratio of 16.52. Its 52 week trading range has been $61.00 to $73.23. It is currently trading at around $69. It reported second quarter 2011 earnings of $5.26 billion, an increase from first quarter earnings of $5.03 billion. Second quarter net income was $408 million, a substantial increase from first quarter net income of $350 million. Kimberly-Clark has quarterly revenue growth of 8.10%, a return on equity of 31.27%, and pays a dividend with a yield of 4.10%.

One of Kimberly-Clark’s closest competitors is Procter & Gamble Co (NYSE:PG). Procter & Gamble currently trades at around $63 and has a market cap of $171.99 billion. It has a price to earnings ratio of 15.88, quarterly revenue growth of 10.20% and a return on equity of 18.23%. Procter & Gamble pays a dividend with a yield of 3.30%. These key performance indicators show that both companies are performing on par.

Kimberly-Clark’s cash position has improved, the second quarter balance sheet showed $908 million in cash, a substantial increase from $585 million for the first quarter. Kimberly-Clark’s quarterly revenue growth of 8.10% is less than the industry average of 9.10%, and its return on equity of 31.27%, is greater than the industry average of 23.50%. This indicates that it is performing on par with many of its competitors, although its growth prospects are not as optimistic as many.

The earnings outlook for the Personal Goods industry is stable with slow growth predicted for 2012. In addition, the weaker US dollar combined with stronger than expected manufacturing data bodes for well for US based manufacturers such as Kimberly-Clark. When this positive outlook is viewed in combination with Kimberly-Clarks increased second quarter earnings, strong balance sheet, solid performance indicators and attractive dividend yield I rate the company as a buy.

Ace Limited (NYSE:ACE)

Ace Limited has a market cap of $24.22 billion and a price to earnings ratio of 13.31. Its 52 week trading range is $56.90 to $73.76. It is currently trading at around $72. It reported second quarter earnings 2011 of $4.25 billion, an increase from first quarter earnings of $3.81 billion. Second quarter net income was $607 million, a substantial increase from first quarter net income of $259 million. Ace Limited has quarterly revenue growth of 8.60%, a return on equity of 7.88%, and pays a dividend with a yield of 1.90%.

One of Ace’s closest competitors is The Travelers Companies Inc (NYSE:TRV). The Travelers Companies currently trades at around $58 and has a market cap of $23.98 billion. It has a price to earnings ratio of 14.86, quarterly revenue growth of -1.20% and a return on equity of 6.49%. It pays a dividend with a yield of 2.80%. Based on these key performance indicators it is being outperformed by Ace.

Ace’s second quarter 2011 balance sheet showed cash of $833 million, a decrease from first quarter cash of $1.12 billion. Ace’s quarterly revenue growth of 8.60%, versus an industry average of 2.70%, and return on equity of 7.88%, versus an industry average of 7.90%, indicates that it is performing better than many of its competitors.

As discussed earlier, the outlook for the Property and Casualty Insurance industry is subdued primarily due to the poor economic environment. However, when the company’s solid performance indicators are considered in conjunction with the substantial increase in net income, the current investor interest in the company is understandable. On this basis, I rate the company as a buy.

Source: 5 Stocks At Their 52 Week Highs That Can Surge Higher