A stock at multi-year highs is always something to cheer about for investors, as most buyers will be sitting on a tidy profit.
However, there is always a fear that a multi-year high means the run-up in prices may be near its end and the stock’s gains may not hold.
In this article, we look at three Singapore stocks at multi-year highs and try to figure out what’s next for them.
Why Stocks Reach Multi-Year Highs
There are many reasons why stocks reach multi-year highs.
It could be due to strong earnings growth or a recovery in earnings, which leads to investors rewarding these companies by re-rating their stock prices higher.
Alternatively, stocks in industries that are seeing improvements in macroeconomic conditions or have exposure to secular growth could also see their share prices gallop to multi-year highs.
The key takeaway is that multi-year highs are usually backed by improving fundamentals, with an exception being overly-optimistic expectations from investors.
How to Evaluate a Stock at Its Peak
So, how should you go about evaluating a stock trading at lofty prices?
Looking at recent earnings growth can shed some light on the sustainability of the share price appreciation: Have its earnings been growing in line with the share price?
Also, are current valuations rich compared to history?
Finally, are the future catalysts anchoring investors’ optimism still present, and if so, are investors too hopeful regarding the company’s prospects?
The main point is that fundamentals have to anchor strong price rallies.
UOL Group Limited (SGX: U14) — The Earnings-Driven Leader
With a share price around S$10.80, this property developer is near its five-year high.
UOL saw revenue rising from S$2.7 billion in 2023 to S$3.2 billion in 2025.
More importantly, the group also saw free cash flow nearly doubling to S$1.2 billion during this period.
This strong performance was supported by a lower interest rate environment, which helped boost demand for UOL’s properties.
Furthermore, the recovery in travel also increased demand for the group’s hospitality segment.
Further driving UOL’s share price rally is the recent dividend announcement of S$0.25 per share for 2025, representing a 39% increase compared to the year prior.
Looking ahead, investors should monitor the demand for UOL’s residential properties and keep an eye on travel demand.
Should growth continue unabated, UOL could be a decent buy even at these levels.
If the group fundamentals remain stable, holding the shares makes sense for long-term investors.
However, valuation still matters.
The key takeaway is that rallies driven by improving financials and robust cash flows tend to be far more sustainable than those fuelled by sentiment.
ST Engineering Limited (SGX: S63) — The Dividend Re-Rating Story
With its share price hovering around S$11, ST Engineering, or STE, is trading near a multi-year high.
Other than its strong operating momentum seen across its commercial aerospace and defence segments, part of the reason for the strong share price performance is its dividend growth.
In 2025, STE declared a total dividend of S$0.23 per share, up 35% from 2024.
However, investors should note that the 2025 dividend represents a relatively high payout ratio of 82.7%.
In the past few years, the dividend yield of STE has remained broadly stable; this is remarkable given the sharp rally in share price over the last few years.
Remember, as the share price gets higher, the dividend yield drops.
The fact that the company’s dividend yield remains in a tight range is a testament to the growth of its dividend.
The current dividend yield for the defence provider stands at approximately 2.1%.
This remains appealing on a risk-adjusted basis given the group’s strong order book and growth tailwinds, which continue to support its quarterly payout.
At the very least, holding STE makes sense even at these levels, given the income it provides to shareholders.
The key point to note here is that rallies, when partially explained by higher dividends, are only sustainable if the payout is likely to continue.
Singapore Exchange Limited (SGX: S68), or SGX — The Structural Growth Winner
Hovering at a multi-year high at close to S$22, SGX’s rally is driven partially by supportive industry tailwinds.
With the Singapore government implementing initiatives to boost the local investing scene, SGX is poised to benefit from the increase in trading volume and listings.
It also helps that SGX is the only approved financial exchange in Singapore.
Additionally, the company is strengthening its FX data and analytics offerings, which could further support its growth prospects.
Should long-term growth remain robust, SGX shares are a good consideration for investors.
Holding makes sense if the group continues its steady execution, but investors need to be wary about the possibility of growth peaking.
High valuations can be sustained for secular growth winners, but only if growth continues.
When Selling Might Make Sense
Selling makes sense if a company’s current valuation is stretched compared to historical averages and earnings.
A slowdown in a company’s growth is another possible reason to contemplate selling a position.
Finally, if a rally has made a single position too large for your portfolio, it is also prudent to reduce your position.
The key here is to sell based on a rules-based framework instead of being emotionally-driven.
When Holding or Adding May Be Reasonable
On the other hand, holding or even adding to your position makes sense if the underlying business fundamentals continue picking up.
This is especially so if long-term growth drivers for the company are still intact.
Finally, elevated valuations can be justified if earnings grow strongly.
The key here is that companies being expensive in terms of valuation does not automatically mean you should sell.
Get Smart: High Prices Demand Higher Conviction
In summary, multi-year highs do not signal a buy or sell opportunity.
Ultimately, the right move to make depends on the company’s fundamentals and outlook.
By doing so and relying far less on price, you would be more able to avoid making mistakes that you might regret!
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Disclosure: Wilson H. does not own shares of any of the companies mentioned.
