2 Stocks at 52-Week Highs: Should You Take Profits Now?

Hydrogenics Inc. (TSX:HYG)(NASDAQ:HYGS) and Park Lawn Corporation (TSX:PLC) stocks are pricey right now, but both boast great long-term growth potential.

| More on:

The S&P/TSX Composite Index rose 150 points on June 4. North American stocks surged following dovish comments by U.S. Federal Reserve chairman Jerome Powell. Here in Canada, there is also optimism as the Bank of Canada has drawn back on its own rate-tightening path. Heightening trade tensions and slowing global growth have increased the chances that investors may see a rate cut in 2019. This is a stunning reversal from the middle of 2018.

With that in mind, today we are going to look at two stocks that have reached 52-week highs over the past trading week. Should this environment encourage you to take profits? Or will dovish central banks continue to prop up a shaky stock market and support prices?

Hydrogenics

Hydrogenics (TSX:HYG)(NASDAQ:HYGS) is a Mississauga-based company that develops and manufactures hydrogen generation and fuel cell products based on water electrolysis and proton exchange membrane (PEM) technology. Shares of Hydrogenics have climbed 45.9% month over month as of close on June 4. The stock has enjoyed a sharp post-earnings bump after the company released its first-quarter results on May 14.

The big story at Hydrogenics was the increase in its backlog to $150 million. The company forecasts that it will recognize roughly $57.6 million in revenue in the following 12 months. This has been achieved largely through an investment by the French multinational Air Liquide, which has also bolstered Hydrogenics’s balance sheet.

In previous articles, I have discussed the reasons for investors to be excited about renewables. Hydrogenics is an exciting company, but investors should take care in a volatile market. The stock had an RSI of 73 as of close on June 4, which puts shares firmly in technically overbought territory.

Park Lawn

Park Lawn (TSX:PLC) is a Toronto-based company that provides goods and services associated with the disposition and memorialization of remains in Canada and the United States. In late May, I’d discussed Park Lawn’s success in 2019 and why it is a fantastic option for investors looking long term. Shares have climbed 25% in 2019 so far. The stock hit a 52-week high of $29.94 in trading last week.

Park Lawn released its first-quarter 2019 results on May 14. The company has leveraged its strong balance sheet to move in on acquisitions across North America. Its peers in this sector have been more constrained, which gives Park Lawn a distinctive advantage heading into the next decade. On May 8, Park Lawn announced definitive agreements to acquire two U.S. businesses in Colorado and Missouri.

North America’s aging population positions Park Lawn for significant growth going forward. Right now, it has a hefty P/E of 31, which is pricey in comparison to industry peers. Its strong balance sheet should pique interest, but value investors may want to await a more favourable entry point. Shares had an RSI of 64 as of close on June 4, which puts Park Lawn just outside technically overbought territory.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Investing

GettyImages-1352607170 (1)
Tech Stocks

Why Shopify Stock Is Skyrocketing Today

Shopify published its Q3 report this morning, and it gave investors plenty to be excited about.

Read more »

Hand Protecting Senior Couple
Dividend Stocks

3 Blue-Chip Stocks So Safe Canadians Can Hold Them Until They Die

Canadian National Railway (TSX:CNR) is a stock worth owning for life.

Read more »

stock research, analyze data
Dividend Stocks

14.7% Dividend Yield? Buy Up This Passive-Income Stock in Bulk!

That dividend yield is high, but it still comes with some strong reasons to consider the stock outside of a…

Read more »

calculate and analyze stock
Stock Market

Chewy vs. Pet Valu: Which Growth Stock Is a Better Buy?

Chewy and Pet Valu are two beaten-down pet stocks that trade at a reasonable valuation in November 2024.

Read more »

Forklift in a warehouse
Investing

Canadian Industrial Stocks to Buy Now

Canadian industrial stocks offer a comprehensive variety of safety, dividend, and growth combinations. This ensures that all kinds of investors…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, November 12

Sliding metals prices amid a strengthening U.S. dollar could continue to weigh on TSX mining stocks today.

Read more »

rising arrow with flames
Investing

2 TSX Stocks With Market-Beating Potential

Fairfax Financial Holdings (TSX:FFH) stock has been soaring of late but remains cheap from a valuation perspective.

Read more »

Canadian Dollars bills
Dividend Stocks

1 Dividend Stock That Could Create $5,000 in Tax-Free Passive Income in 10 Years

Here's why Fortis (TSX:FTS) certainly looks like a top dividend stock with outsized total return upside worth buying right now.

Read more »