It's a good time to be a shareholder in Impact Healthcare REIT (LON:IHR): as the share approaches its 52-week high, holders may be wondering whether to sell and take the profit or buy more and ride the uptrend.
Shares in Impact Healthcare Reit are currently trading close to a 52 week high, with the share price up by around 2.86% to 108 over the past month.
For investors holding the stock (or considering buying it), the question is: what now?
52-week highs are a popular market indicator. But research shows investors can be left wondering what to do when it happens when a 52-week high is hit. Here’s a primer on what the academic research says...
What happens when a share hits a new high?
52 week highs are always good news. But surprisingly, the prices of high performing shares can be slow to move when they publish positive earnings news.
Research shows this happens because investors are cautious about bidding high performing shares any higher (even if they deserve it). Psychologists call this anchoring. As humans, we tend to take our time when it comes to changing our opinions in the face of new information - even when it's good news.
This emotional tug-of-war often ends with the ‘new high’ stock drifting higher in price over the coming weeks and months. The upward trend is called “post earnings announcement drift”. As the news sinks in, momentum takes over and the price moves higher.
A look at Impact Healthcare Reit’s StockReport could offer more insight into what’s driving the momentum in its share price - and whether that might continue.
What does this mean for potential investors?
With Impact Healthcare Reit trading close to a 52 week high, it’s possible that investors in the market are uncertain about where the price will move next. It's important to remember that momentum on its own is no guarantee of future returns.
Disclaimer: These articles are provided for information purposes only. The content is not intended to be a personal recommendation. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. The author has no position in the stocks mentioned, unless otherwise stated.