It’s a common sentiment for investors: buying shares that have already surged to their 52-week highs can feel a bit daunting. The emotional comfort of snagging a bargain after a dip is undeniable. However, a rising share price doesn’t necessarily mean you’ve missed the boat entirely. Often, a strong performance indicates that the underlying investment case for a company is actually strengthening.
This is precisely the view I hold for three particular ASX-listed companies. All of them have recently hit or surpassed their 52-week highs, yet I believe they still present compelling opportunities for long-term investors. Let’s take a closer look at these promising stocks.
BHP Group Ltd (ASX: BHP): A Diversified Giant with a Copper Future
BHP has experienced a remarkable run, and it’s understandable why some investors might feel hesitant to jump in after such significant gains. The cyclical nature of resource stocks means that buying after a rally inherently carries risk. Factors like iron ore prices, the health of the Chinese economy, operational costs, and broader commodity sentiment can all cause rapid fluctuations in share prices.
Despite these considerations, I believe BHP’s long-term investment narrative remains robust, particularly with its increasing focus on copper. Copper’s importance is escalating across a wide spectrum of modern industries and technologies. It’s becoming indispensable for electricity grids, data centres, renewable energy infrastructure, the burgeoning electric vehicle market, general industrial activity, and the overarching trend of electrification. Compounding this demand is the inherent difficulty and long lead times associated with bringing new copper supply online.
This dynamic creates a favourable environment for a company of BHP’s considerable scale, financial strength, and existing copper assets. While iron ore continues to provide a powerful and consistent cash flow foundation for the group, the development of its potash project at Jansen offers another significant long-term growth avenue. I find this diversified portfolio particularly appealing. Although BHP isn’t a pure-play copper stock, it offers investors exposure to this critical metal through a diversified mining behemoth possessing world-class assets.
While the valuation might not appear inexpensive following its recent ascent, I would still consider buying BHP shares as a strategic, long-term holding within the resources sector.
Electro Optic Systems Holdings Ltd (ASX: EOS): High-Risk, High-Reward in Defence Technology
Electro Optic Systems (EOS) represents a significantly higher-risk proposition on the ASX, but I believe the potential rewards are substantial. The company operates at the forefront of defence technology, with its core competencies spanning counter-drone systems, remote weapon stations, high-energy laser weapons, and space control capabilities.
My interest in EOS stems from the rapidly evolving landscape of modern defence requirements. Drones have become a prominent feature in contemporary military conflicts, border security operations, the protection of critical infrastructure, and public safety initiatives. This reality fuels a strong demand for sophisticated systems capable of detecting, tracking, and effectively neutralising aerial threats.
Furthermore, EOS has recently completed its acquisition of MARSS. This strategic move integrates MARSS’s NiDAR system, which enhances command-and-control capabilities, and significantly broadens EOS’s counter-drone offering. This integrated approach could prove highly attractive to customers seeking comprehensive solutions rather than fragmented product sets, potentially elevating the business’s value proposition.
The company’s recent Annual General Meeting presentation underscored a substantial illustrative order book and indicated strong customer interest across both its counter-drone and space control divisions. While investors will need to closely monitor execution, contract finalisation timelines, and cash flow generation, I am optimistic that EOS has now established a stronger platform from which to pursue and capture a significant share of the global defence technology market.
Dicker Data Ltd (ASX: DDR): A Steady Hand in Technology Distribution
Dicker Data is another ASX-listed company that I would be inclined to purchase, even with its recent strong performance. While not always perceived as a flashy growth stock, I believe Dicker Data occupies a highly valuable niche within the Australian and New Zealand technology markets.
The company functions as a technology distributor, collaborating with reseller partners to supply a comprehensive range of hardware, software, cloud services, and infrastructure products from leading global vendors. This strategic positioning places Dicker Data at the nexus of ongoing technology expenditure across businesses, government entities, and enterprise clients.
I also appreciate that Dicker Data benefits from exposure to multiple, consistent technology trends simultaneously. These include the ongoing shift towards cloud adoption, the increasing prevalence of software subscriptions, the necessity for infrastructure upgrades, the critical demand for cybersecurity solutions, the burgeoning spending related to artificial intelligence, and the persistent PC refresh cycle.
Naturally, Dicker Data remains susceptible to factors such as margin pressures, demand cycles, working capital management, and the dynamics of its vendor relationships. However, its extensive operating history, well-established partner network, and broad product portfolio solidify its position as a quality technology stock.
The Takeaway: Don’t Fear the 52-Week High
A 52-week high shouldn’t automatically deter investors. The more pertinent question to ask is whether the underlying business has the capacity for continued improvement over the next five to ten years. In the cases of BHP, EOS, and Dicker Data, I believe the answer is a resounding yes.
What truly matters to me is whether the current strength in these share prices is substantiated by genuine business momentum. For each of these companies, I see long-term growth drivers that have the potential to sustain their upward trajectory, even if the journey ahead involves some turbulence. While none are without their imperfections, I believe each possesses sufficient long-term potential to warrant a purchase, even after a period of strong performance.
