What is a 52-Week High/Low for Stocks?
When doing research for an investment, you want to know how it’s performed in the past. When it comes to evaluating past company performance, one of the simplest metrics to look at is the 52-week spread. What is a 52-week high/low for stocks? Aside from a quick snapshot into the highs and lows of the company over the past year, it’s also an indicator of where the current share price falls in relation to the range.
Here’s everything you need to know about the 52-week high and low of a stock, and how it’s useful as an investment tool right now.
Breaking Down the 52-Week Spread
Stock prices rise and fall with market action each and every day. The day range will show you the highs and lows of intraday trading, as well as what the closing price of the security was. That closing price factors into the 52-week outlook for the stock.
For example, ABC Company might fall to a new low of $5.50 on June 15th. Then, it reverses on good news and keeps on rising over the next year. It peaks at $18.75 on May 12th of the following year, before settling back at $18.25 on June 15th. In this 52-week span, the low-high spread of the stock is $5.50-$18.75. These represent the minimum and maximum prices over the span of a year.
Note that the 52-week high-low for stocks is a rolling spread. With each new week added, the oldest week falls off. A company’s 52-week highs and lows will stay the same until the high or low figure falls off the oldest week or emerges in the newest week. For example:
- If ABC Company’s 52-week low is $4.00 and that price occurred 52 weeks ago, next week it’ll have a new low based on the lowest price in the upcoming 52-week span.
- If ABC Company hits a new high next week, it’ll supplant the older 52-week high, immediately adjusting the range.
By itself, the 52-week spread is a great way to tell exactly how volatile the company was over the last year. But it’s a metric that means more with context. It’s important for investors to use the 52-week spread in conjunction with other information, to get a clearer picture of its significance.
Why is the Range of a Stock Price Important?
The 52-week range of a stock is an important measure of where it’s been, where it’s going and where it’s at. Here are a few important snippets of information an investor can glean from a review of these figures:
- A look at total range can tell you how active a stock was over the past year. A stock with a spread of just a few dollars isn’t very active and might not offer you the returns you want. Conversely, a stock with magnitudes of difference between the high and low figures indicates either a very good or very bad year, depending on trend.
- Highs and lows in the context of current prices are very telling. If a stock price is near its 52-week low, it might be coming off of hard times. Value investors might see it as an early entry opportunity. If the stock is near its 52-week high, it might be a bullish sign that encourages profit-taking. Context matters.
- Viewed on a stock chart, there’s a wealth of information for investors in examining the 52-week figures. It’s easy to spot technical trends, view investor sentiment and even see volume at the high and low points. This can inform trading actions such as where you place stop-losses or target entry or exit points.
It’s best to think of the 52-week highs and lows as benchmarks for stock performance. As stocks near them, you’ll get clarity on how to act. It’s also easier to decipher patterns and investor sentiment with high and low context. These figures are simple, yet highly informative when viewed through the right lens.
How to Use 52-Week Numbers
How you use 52-week data really comes down to your investing or trading style. Fundamental investors use these figures as context for volatility. Technical investors use this range and accompanying charts to gain insight into patterns. The most common application for 52-week high and low figures is as a proxy for buy/sell decision-making.
For example, if a stock’s 52-week range is $20-$95 and it’s currently trading at $25, it’s reasonable to assume that the company is performing poorly. The current price is near the low threshold. You might shy away from investing in it (or take a short position).
In another example, you pull up a 52-week chart and see that the low of $20 occurred 40 weeks ago and the $95 peak was just four weeks ago. You also notice that the stock tested resistance levels at $90 since peaking, and is currently supported at $85. You believe the run-up will continue, so you buy and set a target price of $95.
These are just a couple of basic examples that lead to more informed investing. Seasoned investors will find themselves quickly assessing the 52-week range as part of general stock evaluation.
Get Familiar With 52-Week Ranges
What is a 52-week high/low for stocks? Though mere data points on their own, 52-week high and low figures provide great context when evaluating the current and future standings of a stock. They’re macro variables that pave the way for more informed decision-making at the transaction level. Depending on a stock’s price in relation to the range, you may decide to buy, sell or avoid a stock altogether. There’s a lot to learn about the future from looking at the past.
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