2 Stocks Near 52-Week Highs That Still Look Like Bargains

You’ve probably heard of the buy-low-and-sell-high strategy, but what about buying high and selling even higher? The best stocks rarely pull back, so waiting for an ideal time to buy isn’t always an option.

You barely need to open your eyes to find stocks that soared this year, but it’s a lot harder to find ones that have a lot more fuel in the tank. Luckily, I found these two. They both climbed to 52-week highs recently, but their valuations are still low enough to make them look like bargains. Here’s how they could make excellent additions to your portfolio.

1. Meta Platforms

Shares of Facebook’s and Instagram’s parent company, Meta Platforms (META -0.49%), tanked last year in response to top-line revenue that contracted for the first time since the company went public in 2012. Investors were also disturbed by heavy metaverse-related investments that might never pay off, loss of engagement due to stiff competition from TikTok, and changes to Apple‘s platform that make it harder to track iPhone user activity.

In the fourth quarter of 2022, the company’s operating margin shrank to 20%, which did not compare well to the 40% operating margin the company reported in 2021. To right the ship, Meta CEO Mark Zuckerberg announced sweeping layoffs earlier this year and declared 2023 would be a much-needed year of efficiency.

Signs that Zuckerberg was right have already driven the stock 97% higher this year. Ad prices are still down, but engagement in March rose 5% year over year to 3.02 billion daily active people. Investors were also encouraged by total revenue that rose 3% year over year.

With more than 3 billion daily active users, and around $56 billion in annual operating cash flow, Meta probably has the resources it needs to stay ahead of the competition. However, its recent market valuation of just 21 times forward-looking earnings expectations doesn’t have much growth baked in. Buying it now could be a smart move.

2. Vertex Pharmaceuticals

Shares of Vertex Pharmaceuticals (VRTX 0.66%) are up about 34% over the past year. Investors recently drove it up to a 52-week high in response to soaring sales of its marketed treatments and the progress it’s making with an industry-leading pipeline of experimental drugs.

Vertex is the only company on the planet with approved treatments that address the underlying cause of cystic fibrosis, a progressive, fatal disorder. First-quarter product sales soared 13% year over year to $2.3 billion, and without any competition on the horizon, we can expect continued growth for years to come.

Vertex currently leans on its cystic fibrosis franchise for 100% of revenue, but this probably won’t be the case for much longer. Earlier this year, Vertex and collaboration partner CRISPR Therapeutics sent applications to the FDA for a new gene therapy called exa-cel that could make it a treatment option for people with severe sickle cell disease and transfusion-dependent beta-thalassemia.

Vertex is also running a phase 3 trial with an experimental pain drug called VX-548, which hasn’t received nearly as much attention as it deserves. This is a potential first-in-class treatment that could become a viable alternative to highly addictive opioids. Investors want to keep their eyes open for results from ongoing phase 3 trials that are expected to produce results in early 2024.

With a successful cystic fibrosis franchise and a string of potential new medicines emerging from its pipeline, Vertex’s bottom line could grow by leaps and bounds. With this in mind, you might be surprised to learn its stock is trading for just 23.4 times forward-looking earnings estimates. Scooping up some shares at this bargain price and holding them gives you a great chance to realize market-beating gains over the long run.