NEW YORK ( TheStreet) -- Buying a stock that is near a 52-week high is buying strength and going with the flow. Like a river, moving along with the flow can make your work much easier than trying to fight the market. For most investors, it's also more natural avoiding a contrarian view. The trick is not jumping into the river immediately upstream from a waterfall.
Historic stock performance indicates most stocks making 52-week highs continue to rise further. I have spent countless hours studying data on companies that are able to reach new trading levels and those that fail to continue higher.
While I haven't found a "magic bullet" if it's out there, I have found stocks with certain characteristics tend to have a higher performance ability than others. The result is a small group selected that are near or creating 52-week highs, and have the most favorable investor risk-to-reward ratio.
I use a filtering process that includes: