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52 Week Range |
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WIKI ANALYSIS| This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition. |
52 Week Range is the highest and lowest prices of the last 52 weeks (one year)
The 52 week range is a simple technical indicator that lists the highest and lowest price at which a security was sold over preceding 52 weeks (or one year).
Investors, especially technical analysts, may use the 52 week range to gauge whether a stock's current price suggests buying, selling, or taking no-action. Many value investors look for stocks that are at or near their 52 week low, but this metric alone does not indicate whether a stock is under-valued. For example, a stock may near its 52 week low in a price correction after earnings expectations for future quarters were revised. There is no guarantee that when share prices reach a 52 week low, the stock will begin to trade higher - it could break down to an even lower level.
However, as 52 Week Range has little to no connection whatsoever with current news or forces affecting companies today, very few investors rely heavily on the metric. Instead, the 52 Week Range is generally used more as a descriptive metric to describe what the stock has done and not what it will do.
Applications of the 52 Week Range
Investors may use the 52 week range as a starting point in a deeper analysis of a stock. It is often useful to compare a stock to general stock market indexes, such as the S&P 500 or the Dow Jones Industrial Average. If the stock is at a low point, while key indexes are not, then that stock is said to be under-performing the market. However, if many widely-owned stocks are hitting 52 week lows around the same time, investors may take this as an indication of a greater market trend and slow overall economic growth. The reverse is true for the 52 week high. In essence, the 52 week range can be used in conjuncture with other metrics to judge the value of a stock in comparison to others.
Example
- Today, Company ABC is trading at $13.74 per share. One year ago, the company was trading a $18.30. Between then and now, the price of ABC climbed to $24.60, then fell to $10.69 before climbing back to its current price. As such, ABC's 52 Week Range is $10.69 – $24.60.
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