Buying stocks near their highs feels weird; after all, doesn’t that go against the convention of “buy low, sell high”?
However, if you think about it, the very best stocks are those that constantly reach fresh highs.
Maybe the real question then is, at all-time highs, can this particular stock still grow?
Why Stocks Reach 52-Week Highs
Stocks reach fresh highs for many different reasons: posting strong earnings, a change in how investors view their business, or even a change in the stock’s industry fortunes.
An unexpected increase in dividends or profit margins can also send the stock higher.
Should a company also strengthen its competitive positioning or market leadership?
Well, that’s a good fundamental reason for shares to be pushing to new highs.
The key takeaway here is that stocks typically hit new highs due to certain factors going well for them.
Oversea-Chinese Banking Corporation Limited (SGX: O39), or OCBC – The Earnings Momentum Winner
OCBC is one that is trading close to fresh highs, and for good reason.
The bank’s latest earnings report (ending 31 March 2026) saw net profit rising 5% year on year (YoY) to nearly S$2 billion, on the back of double-digit growth in its non-interest income over the same period.
Why are investors excited?
Net profit rose despite net interest income falling by 5% YoY to S$2.2 billion.
Said another way, the local bank is able to offset the losses in its lending operations and post a profit gain.
Does that mean you should go out and buy OCBC shares now?
Well, if earnings can continue growing at the current pace, the recent rally in its shares might still have legs.
However, do note that OCBC is richly priced, trading at a last-12-month price-to-book ratio of 1.7x, representing a decent step up from its five-year historical average of approximately 1.2x.
ST Engineering (SGX: S63), or STE – The Dividend Re-Rating Story
Another company that is trading near 52-week highs is the prime defence contractor for Singapore: ST Engineering.
One of the reasons supporting its recent ferocious rally is the substantial dividend hike announced by the group: the total dividend paid of S$0.23 per share for 2025 represents a sharp 35.2% spike compared to the previous year.
Do note that this includes the special dividend of S$0.05 per share.
However, this increase continues the dividend growth trend displayed by STE over the past two years, a record likely to continue given management’s commitment to paying a third of incremental net profits to shareholders moving forward.
The bugbear?
Shares of STE are not cheap, trading at a forward price-to-earnings ratio of 32x.
Nevertheless, you could argue that, given the business’s momentum and expected increase in dividend payout, this elevated valuation can eventually be supported.
Quality growth in dividends, backed by strong underlying business momentum, can provide decent valuation support.
Keppel Limited (SGX: BN4), or Keppel – The Structural Growth Leader
Keppel has been recording fresh highs, thanks to its strategic positioning to tap into specific long-term trends, including energy transition and digitalisation.
With these trends stretching over multiple decades and the total addressable market opportunities amounting to trillions, there is plenty of meat left on the bones for Keppel to capitalise on.
So, do you buy Keppel here?
Well, the onus is on Keppel to deliver; it all depends on whether the group can continue its strong execution seen in its new business segments (“New Keppel”) thus far.
Remember, structural winners can continue compounding for years.
Get Smart: New Highs Don’t Automatically Mean “Too Late”
To summarise, stocks hitting new yearly highs do not mean they are no longer a buy at these levels.
Of course, you should be wary of stocks hitting fresh highs while their fundamentals deteriorate, or if the share price gains are based on market euphoria and are not supported by actual business gains.
Equally important, be mindful of overly-stretched valuations.
Remember, the best stocks almost seem “expensive”.
Sometimes, you can be caught waiting for a pullback that never comes.
The best thing you can do is to focus on the fundamentals; to quote Warren Buffett: games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard.
In other words, focus on the business – if it does well, the share price will follow.
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Disclosure: Wilson H. does not own shares in any of the companies mentioned.
