Monday, 13 September 2010
Richmont Mines Inc. (RIC) [Chart - Analysis - News] established a new 52-week high yesterday at $5.25. Clearly investors are enthusiastic about the firm's prospects. The rally was accompanied by higher than average volume, which adds to the momentum behind yesterday's move.
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The question is, can RIC continue moving higher? The stock has gained 24.7% during the past month, has a price-to-book value of 1.92 and a PEG ratio of 0.
Studies have shown that investors who buy stocks after hitting yearly highs during a bull market achieve higher average returns that the broad market indexes. This is a great example of the trader adage that "the trend is your friend." However, these historical results are based on large averages---and some bullish momentum in the market. It is much more difficult to say whether RIC, as a single stock, will continue to hit new highs. But for the time being, things look promising.