All Time High Stocks

What are All Time High Stocks?

All time high stocks are stocks whose prices have reached their highest peaks since their listing. Imagine it like a car setting a new speed record: just as the car surpasses its previous top speed, the stock has exceeded all its past prices. Investors can often view these peaks as an indicator of the company’s strong performance and potential for further growth, but it can also prompt concerns about whether the stock might be overpriced. An all time high can show that the market views the company’s performance as exceptionally strong.

What is an All Time High in the Stock Market?

It can reflect a growing economy when the market is at an “all time high”. Investing at these peaks can be challenging. From 1991 to March 2024, the market hit an “all time high” 22 times in 33 years and 3 months, averaging about every 1.5 years. Notably, the market has reached an “all time high” each year for the past eight years.

How to Invest in All Time High Stocks in India?

Here is how one can invest in all time high breakout stocks in India:

1. Open a demat/trading/stockbroker account if you don’t have one already. One can open a demat account on smallcase!

2. Search for stocks that have reached their all time highs.

3. Investors can utilise online screeners like the Tickertape Stocks Screener to conduct thorough research on these stocks. There are 200+ filters available for investors to use and conduct research on the past performance of these all time high stocks.

4. Place a ‘Buy’ order on the all time high stocks of your choice.
Note: Investors should conduct thorough research into their investments and consult a financial advisor before investing.

Features of All Time High Stocks in India

Here are a few key features that all time high stocks in India may have:

• Peak Price: The stock price has reached its highest price point ever recorded.
• Strong Performance: This can often indicate that the company has performed exceptionally well.
• Market Confidence: Investors may view the stock as a sign of strong future growth potential.
• Potential Overvaluation: High prices can raise concerns about whether the stock is overpriced.
• Milestone: It can be considered a significant achievement. It can suggest that the company excels in the market.

How to Choose the Best All Time High Stocks?

Here are a few parameters that may be important when choosing stocks at an all time high for your portfolio:

• Total Revenue: Steady year-on-year (YoY) growth in a company’s total revenue can be crucial for its future prospects. Investors can avoid stocks hitting all time highs without revenue growth.
• Diluted Earnings Per Share (EPS): Unlike basic EPS, diluted EPS includes potential shares from convertible securities, providing a more accurate measure of earnings. An increasing diluted EPS year-on-year can indicate growing shareholder value.
• Price-to-Earnings (PE) Ratio: The PE ratio compares a stock’s current price to its EPS, helping assess if it’s overvalued or undervalued. A high PE ratio can suggest a high expected growth and a willingness to pay a premium, while a low PE ratio may indicate undervaluation or growth challenges.
• Relative Strength (RS): This measures a stock’s performance compared to the Indian benchmark index, NIFTY 50. A positive RS can mean that the stock is outperforming the benchmark. This can indicate a strong momentum. A negative RS suggests underperformance. Investors can use RS scans to identify stocks outperforming the index. Investors can look for NIFTY 50 all time high stocks if they want to invest within the index.

Who Should Invest in All Time High Stocks?

Here are a few potential types of investors that may be interest in all time high stocks:

• Growth Investors: Growth investors seek companies with high potential for significant capital appreciation. They focus on stocks demonstrating robust performance and strong momentum, as these can often indicate future growth prospects. All time high stocks or stocks near all time highs can represent companies with proven success and potential for continued upward movement for growth investors.
• Momentum Traders: Momentum traders thrive on short-term price movements and market trends. They leverage technical indicators like RS and RSI to identify stocks with strong momentum. This can often be found at all time highs. These traders aim to capitalise on the momentum. They aim at buying high with the expectation of selling even higher in the near term.
• Long-Term Investors: Long-term investors look for companies with solid fundamentals and a history of steady growth. Stocks reaching all time highs can belong to companies with strong revenue growth, increasing diluted EPS, and favourable PE ratios. Long-term investors might see these stocks as reliable additions to their portfolios.
• Risk-Tolerant Investors: Investing in all time high stocks can be risky, as prices may drop from peak levels. Risk-tolerant investors, who are comfortable with potential market volatility and short-term losses, might find these stocks appealing. They often have a diversified portfolio and are willing to take calculated risks for the possibility of high returns.
• Sector Enthusiasts: Investors with a deep understanding of specific sectors may be drawn to all time high stocks within their areas of expertise. Their knowledge enables them to identify companies likely to maintain or surpass their peak performance, making informed decisions based on industry trends and potential.

Benefits of Investing in All Time High Stocks

Here are a few potential benefits of investing in stocks that have reached their all time highs:

• Indication of Strong Momentum: All time high NSE stocks can often exhibit strong momentum. This can suggest a robust performance and potential for continued growth. Historical data indicates that stocks hitting new highs have often continued to perform well, reflecting strong underlying fundamentals and investor confidence​.
• Market Trends and Sentiment: Stocks at all time highs can reflect positive market trends and overall investor sentiment. This can often be an indicator that companies are performing well, economies are stable, and future prospects are promising. This can be particularly beneficial for investors seeking to capitalise on upward market trends​.
• Effective Portfolio Rebalancing: All time highs can offer a strategic point for portfolio rebalancing. By reallocating assets when the market is high, investors can lock in gains and adjust their portfolios to manage risk more effectively. This disciplined approach helps maintain a balanced asset allocation and can enhance long-term returns by reducing volatility​.

Risks of Investing in All Time High Stocks

Here are a few risks that investors may face when investing in all time high stocks:

• Market Volatility: Investing at peak levels can expose investors to heightened market volatility. Stocks at their highest prices might experience sharp corrections driven by profit-taking or changes in market sentiment. While all time highs can lead to further gains, they can also precede significant downturns​​.
• Overvaluation: NSE all time high stocks might be overvalued. This means that their prices do not accurately reflect their intrinsic value. High Price-to-Earnings (P/E) ratios can indicate that investors expect continued growth, but if a company’s future earnings fail to meet these expectations, the stock price can drop sharply​.​
• Economic and Geopolitical Risks: The broader economic environment and geopolitical events can significantly impact stock prices. Factors such as interest rate changes, inflation, and international tensions can​ contribute to market shifts. This can disproportionately affect stocks bought at their all time highs.