2 hot UK stocks hitting 52-week highs!

A couple of UK stocks have been flying of late thanks to very encouraging trading updates. With their share prices at 52-week highs, would our writer buy?

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Since momentum can be such a powerful force in investing, I’m always keeping an eye on which UK stocks are in demand. And there have been two from the home-focused FTSE 250 that have been grabbing my attention recently.

Soaring passenger numbers

Shareholders of self-styled ‘global travel retailer’ WH Smith (LSE: SMWH) have had a very good few months, with the shares now sitting at a fresh 52-week high. If I’d had the skill (or luck) to buy back at the low in May, I’d be looking at a capital gain of around 40%! Just buying one month ago will have led to a gain of 17%.

Created with Highcharts 11.4.3WH Smith PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The latest leg-up has come off the back of a (very) positively received update for the end of its financial year. Revenue climbed 7% as strong passenger numbers in H2 increased demand for travel accessories, food, drink magazines and books.

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With inflation returning to more normal levels and interest rate cuts underway both here and in the US, I wouldn’t bet against this form continuing.

What’s the moat?

There are, of course, no guarantees. While trading in FY25 so far had been in line with expectations, next year won’t include some of the key sporting events (e.g. Paris Olympics, Euro 2024) that have seen more travellers coming to Europe and passing through airports where WH Smith has a presence. Oh, and there could be an unwelcome bounce in inflation.

On a more positive note, a price-to-earnings (P/E) ratio of 15 still doesn’t feel unreasonable for a stock in the Consumer Cyclicals sector. There’s a forecast 2.6% dividend yield that looks likely to be well covered by profit too.

Despite this, I’m not looking to buy because I hold a business that also has exposure to travel hubs: sausage-roll seller Greggs.

But I’ll definitely keep following the stock.

Meaty gains

Another company hitting a 52-week high is meat supplier Cranswick (LSE: CWK).

In the last five years, the shares have climbed a little over 70% in value. With dividends reinvested, the result would have been even better. Buying at the beginning of 2024 would have netted me a 32% paper gain alone.

Created with Highcharts 11.4.3Cranswick Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Beating forecasts

The latest (and record) high comes off the back of a tasty half-year update. The Hull-based business reported that trading since the end of Q1 had been “stronger than previously expected“. As a result, it believes first-half performance will be ahead of the same period in 2023.

On top of this, management’s outlook for the whole financial year is now “towards the upper end of market expectations“.

That’s the sort of bullish talk I like hear!

Too hot?

What don’t I like about the investment case? Well, a P/E of 20 isn’t exactly cheap for a low-margin business that’s dependent on a small number of major customers. In fact, Cranswick’s reliance on a positive relationship between the UK and China (a key buyer) could prove problematic. It’s already mentioned being “cautious” about the current economic and geopolitical environment.

Whether I’ll get a chance to buy at a reduced price remains to be seen. Right now, investors are will to pay up for the growth story, which includes the company expanding its pig-farming operations.

But I think there are possibly better opportunities elsewhere in the market.

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Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Greggs Plc and WH Smith. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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