Investors are interested in the 52-week high/low numbers for a variety of reasons, including as an indicator of how volatile the stock has been over the past year and whether the stock is trending in one direction or the other. The 52-week high/low—sometimes referred to simply as “52-week range”—is another common statistic provided in stock quotes. These two numbers are the highest closing price and lowest closing price of the stock in the past 52 weeks. When each new week is added, the oldest week is removed.
Alternate name: 52-week range
For example, an investor analyzing carmaker Tesla’s stock on July 26, 2021, can go to a site like Yahoo Finance and see that the highest closing price the stock hit in the previous 52 weeks was $900.40, and the lowest closing price the stock reached in the same time period was $273.
How 52-Week High/Low Works
How the 52-week high/low information is used depends on your investing style. You may look at the difference between Tesla’s high and low closing prices and determine it is more volatile than the stocks you like to invest in. Or, you might determine the gap indicates the stock has room to grow further Other investors choose to buy or sell when a new 52-week high or low is reached. A 2008 study revealed that the volume of shares purchased or sold spikes during weeks when a stock price crosses either the 52-week high or low mark. The study noted that trading increases when the stock moves past the high or low mark, then subsides. Among those who pay particular attention to 52-week high/low marks are momentum investors. This strategy posits that a stock market’s recent winners and losers will remain winners and losers in the near term. The strategy also is known as “relative strength investing.” Momentum investors who use 52-week highs or lows to trigger a buy or sell order feel there are factors that cause a stock to rise above or fall below its 52-week range, and that those factors will continue to push the price in that direction. Because they cannot continuously monitor stock market movements, momentum investors often set a stop-loss order to sell a stock if the price falls far enough or a limit order to initiate a purchase if it hits a price target.
What It Means for Individual Investors
As a 2014 research paper published by hedge fund manager Clifford S. Asness and his team noted, investing based on the 52-week high/low has some legitimate historical context, although past performance isn’t a guarantee of future returns. “The existence of momentum is a well-established empirical fact,” Asness wrote. “The return premium is evident in 212 years of U.S. equity data.” Asness and his team determined that between 1991 and 2013, the spread in performance between stocks that had high relative past one-year returns and those that had low relative one-year returns was 6.3% in favor of the stronger-performing stocks. That spread grows to 8.3% when you expand the time frame to between 1927 and 2013. Whether you are a staunch believer in momentum investing or not, reviewing a stock’s 52-week high and low prices can give you useful information.
