Hedge Funds Are Buying These 9 Stocks Near 52-Week Highs

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Includes: ABR, AVGO, NCS, ON, QRVO, RF, ROIC, SPR, SUMR
by: Kapitall

Summary

The S&P 500 (SPX) ended has reached yet another high, last Thursday marking the 28th record close set this year.

Some still doubt the sustainability of the bull market, which is currently in its fifth year, while others believe there are still more highs in store.

We screened for stocks with significant net purchases by institutional investors in the current quarter.

The S&P 500 (SPX) reached yet another high last Thursday, marking the 28th record close set this year. The index rose to 1992.37 yesterday thanks to better-than-expected data regarding home sales, initial jobless claims, and manufacturing in Philadelphia. Thursday's close beat the previous record of 1987.98 set nearly a month earlier on July 24th.

Some still doubt the sustainability of the bull market, which is currently in its fifth year, while others believe there are still more highs in store. Dan Veru, Chief Investment Officer at Palisades Capital Management, told USA Today that higher stock prices are understandable after a strong earnings season filled with positive surprises.

We decided to run a screen for those who believe that the market will see more highs before the year's end. To begin, we screened for stocks trading up to 5% below their 52-week high, which is a stock's highest price over the last year. Depending on your investing strategy, you may either buy when a stock is close to its 52-week high or you may sell. We decided to tailor the rest of our screens for investors leaning towards the former.

Click here for the full, interactive chart.

To construct the screen, we looked for investor activity that might signal strong belief in a stock's upward potential. We screened for stocks with significant net purchases by institutional investors in the current quarter. This suggests these investors are bullish on these stocks.

And finally, we decided to look for potentially undervalued stocks as indicated by an EPS/price mismatch. If you assume a company's price-to-earnings (P/E) ratio is equal to a constant k, any bump in the average analyst EPS estimate should be mirrored by a proportional increase in the company's share price. However, if the increase in EPS is bigger than the increase in share price, a mispricing may have occurred. And, as a result, the stock might be undervalued.

Click here for the full, interactive chart.

1. Arbor Realty Trust Inc. (NYSE:ABR): Operates as a real estate investment trust (REIT). Market cap at $349.83M, most recent closing price at $6.98.

The REIT is trading 2.77% below its 52-week high.

Net institutional purchases in the current quarter at 1.8M shares, which represents about 5.25% of the company's float of 34.29M shares. The two holders of the stock are Wellington Management Company, LLP and EJF Capital LLC.

The EPS estimate for the company's current year increased from $0.53 to $0.57 over the last 30 days, an increase of 7.55%. This increase came during a time when the stock price changed by 0.58% (from $6.87 to $6.91 over the last 30 days).

2. Broadcom Corp. (BRCM): Designs and develops semiconductors for wired and wireless communications. Market cap at $21.05B, most recent closing price at $39.16.

The stock is trading 3.88% below its 52-week high. Net institutional purchases in the current quarter at 29.3M shares, which represents about 5.36% of the company's float of 546.18M shares. The two top holders of the stock are Capital Research Global Investors and FMR, LLC.

The EPS estimate for the company's current year increased from 2.56 to 2.84 over the last 30 days, an increase of 10.94%. This increase came during a time when the stock price changed by 0.45% (from 37.84 to 38.01 over the last 30 days).

3. Fairchild Semiconductor International Inc. (FCS): Designs, develops, manufactures, and sells power analog, power discrete, and non-power semiconductor solutions worldwide. Market cap at $2.03B, most recent closing price at $16.81.

The stock is trading 3.34% below its 52-week high.

Net institutional purchases in the current quarter at 7.0M shares, which represents about 5.88% of the company's float of 118.99M shares. The two top holders of the stock are Dimension Fund Advisors LP and Royce & Associates, LLC.

The EPS estimate for the company's current year increased from 0.51 to 0.64 over the last 30 days, an increase of 25.49%. This increase came during a time when the stock price changed by -1.66% (from 15.66 to 15.4 over the last 30 days).

4. NCI Building Systems Inc. (NYSE:NCS): NCS manufactures and markets metal products primarily for the nonresidential construction industry in North America. Market cap at $1.42B, most recent closing price at $19.58.

The stock is trading 2.78% below its 52-week high.

Net institutional purchases in the current quarter at 10.6M shares, which represents about 36.59% of the company's float of 28.97M shares. The two top holders of the stock are Clayton, Dubilier & Rice, LLC and Royce & Associates, LLC.

The EPS estimate for the company's current year increased from 0.19 to 0.2 over the last 30 days, an increase of 5.26%. This increase came during a time when the stock price changed by 1.45% (from 18.63 to 18.9 over the last 30 days).

5. RF Micro Devices (RFMD): Designs, develops, manufactures, and markets radio frequency (NYSE:RF) components and compound semiconductor technologies in the United States and internationally. Market cap at $3.44B, most recent closing price at $11.99.

The stock is trading within 0.91% below its 52-week high.

Net institutional purchases in the current quarter at 42.0M shares, which represents about 15.75% of the company's float of 266.71M shares. The two top holders of the stock are FMR, LLC and The Vanguard Group, Inc.

The EPS estimate for the company's current year increased from 0.77 to 1.02 over the last 30 days, an increase of 32.47%. This increase came during a time when the stock price changed by 19.59% (from 9.65 to 11.54 over the last 30 days).

Click here to see the full, interactive chart.

6. Retail Opportunity Investments Corp. (NASDAQ:ROIC): ROIC engages in investing in, acquiring, owning, and managing commercial real estate in the United States. Market cap at $1.44B, most recent closing price at $15.92.

The stock is trading 1.34% below its 52-week high.

Net institutional purchases in the current quarter at 13.0M shares, which represents about 14.53% of the company's float of 89.45M shares. The two top holders of the stock are The Vanguard Group, Inc. and Invesco Ltd.

The EPS estimate for the company's current year increased from 0.19 to 0.24 over the last 30 days, an increase of 26.32%. This increase came during a time when the stock price changed by -1.33% (from 15.8 to 15.59 over the last 30 days).

7. Spirit AeroSystems Holdings, Inc. (NYSE:SPR): Designs, engineers, and manufactures commercial aircraft structures worldwide. Market cap at $5.18B, most recent closing price at $37.04.

The stock is trading 1.85% below its 52-week high.

Net institutional purchases in the current quarter at 11.6M shares, which represents about 11.78% of the company's float of 98.49M shares. The two top holders of the stock are Scopia Capital Management LLC and The Vanguard Group, Inc.

The EPS estimate for the company's current year increased from 2.95 to 3.37 over the last 30 days, an increase of 14.24%. This increase came during a time when the stock price changed by 8.32% (from 33.67 to 36.47 over the last 30 days).

8. Summer Infact, Inc. (NASDAQ:SUMR): Engages in the design, marketing, and distribution of branded juvenile health, safety, and wellness products to retailers primarily in North America and the United Kingdom. Market cap at $80.88M, most recent closing price at $4.35.

The stock is trading 3.12% below its 52-week high.

Net institutional purchases in the current quarter at 1.1M shares, which represents about 10.11% of the company's float of 10.88M shares. The two top holders of the stock are Wynnefield Capital Management LLC and Tocqueville Asset Management L.p.

The EPS estimate for the company's current year increased from 0.14 to 0.17 over the last 30 days, an increase of 21.43%. This increase came during a time when the stock price changed by 19.62% (from 3.16 to 3.78 over the last 30 days).

9. TriQuint Semiconductor, Inc. (TQNT): Supplies modules, components, and foundry services to communications companies worldwide. Market cap at $3.43B, most recent closing price at $19.59.

The stock is trading 1.71% below its 52-week high.

Net institutional purchases in the current quarter at 20.7M shares, which represents about 11.91% of the company's float of 173.78M shares. The two top holders of the stock are Capital Research Global Investors and The Vanguard Group, Inc.

The EPS estimate for the company's current year increased from 0.52 to 0.65 over the last 30 days, an increase of 25.%. This increase came during a time when the stock price changed by 18.32% (from 15.99 to 18.92 over the last 30 days).

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Kapitall is a team of analysts. This article was written by Mary-Lynn Cesar, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.