Many people are hesitant to buy stocks when they are at their 52-wk high. Honestly I can relate, there is nothing worse than buying in at a 52-wk high and watching the stock slide. You always know that you bought at the top of the range, and that will be the resistance point.
That said, I can highlight several instances where I have bought at the 52-wk high and done just fine. For example I bought Chevron (CVX) at its 52-wk high back in September and I’m up over 20% on that trade. Some more recent examples; on December 29th I bought El Paso Energy (EP) at its 52-wk high and today I’m up over 25.5% on that trade. Proving that momentum can carry a stock from its high to a much higher high. Similarly on January 5th I rolled the dice to get in on Hess (HES) at a near 52-wk high, after several weeks of waiting for a pullback that never happened. In the 5 weeks since I’m up 6.45% on that purchase.
For sure it does not always work out this well, but I am not letting a 52-wk high on ConocoPhillips (COP) scare me away from a trade I have been waiting to make for several months. During the past 3 months COP has outperformed Total (TOT) +22.64% vs. +13.90%, and more alarmingly +10% vs. +3% in the last month. TOT has a nicer dividend yield, but I believe that Total’s positioning itself heavy in Canadian tar sands is a poor long-term decision. For performance alone I would rather be in COP than TOT, add in my belief that their long-term strategy is wrong and you can see why I’ll sell TOT for a +25% gain and buy into COP even at its current 52-wk high.
Wednesday, February 16, 2011
Monday, February 7, 2011
Kinder Morgan
Today I bought Kinder Morgan Energy Partners LP (KMP) ahead of the IPO of parent company Kinder Morgan, Inc. (KMI). Kinder Morgan Inc. will go public again this week. KMI should price between $26 - $29 a share when it does hit the market. It is also expected to carry a nice 4% dividend yield.
In the mean time, I have pulled the trigger on a stock that I have been watching on and off for the last few years KMP. The pipeline industry is strong, and KMP pays a healthy 6% dividend. Kinder Morgan has a history of very strong delivery. The stock has been on a tear, and is only slightly lower than its 52-week high of $73.08. Today I have paid $71.74 a share with the intention of holding this stock for the long term. I will also closely watch the price on KMI once it is actively on the market.
In the mean time, I have pulled the trigger on a stock that I have been watching on and off for the last few years KMP. The pipeline industry is strong, and KMP pays a healthy 6% dividend. Kinder Morgan has a history of very strong delivery. The stock has been on a tear, and is only slightly lower than its 52-week high of $73.08. Today I have paid $71.74 a share with the intention of holding this stock for the long term. I will also closely watch the price on KMI once it is actively on the market.
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