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Momentum’s a powerful force in investing. For this reason, any company whose share price is hitting a 52-week high probably warrants attention. However, there are at least two UK stocks doing well that I’m avoiding.
Anyone who picked up shares in bootmaker Dr Martens (LSE: DOCS) when Donald Trump first had a tariff tantrum back in April will have seen a return of around 75% by now. But this magnificent gain isn’t purely down to the market becoming (slightly) more comfortable with the US President’s tendency to pivot on a dime when it comes to economic strategy.
The share price absolutely rocketed back in June as the company announced its latest set of full-year numbers. In addition to reporting a better-than-expected £34.1m in adjusted pre-tax profit, management predicted that the figure for FY26 would come in somewhere between £54m and £74m.
On top of this, investors warmed to the firm’s plans to scale back on discounting in important markets such as the US.
Fickle fashion
Taking into account the recent momentum, the shares now change hands for 20 times forecast earnings. That’s not a ridiculous price at face value but it does feel pretty dear for a brand whose products move in and out of fashion. Even when popular, this isn’t an item that tends to be bought often. I’ve had the same pair of boots for about a decade now!
Investors also need to take a step back and see how poorly this company has served shareholders since listing. A stake bought in 2021 will now be down roughly 80%.
Dr Martens’ shares could continue charging upwards from here. But I still don’t want to take on the risk of owning them.
Investors are tuning in
A second stock hitting a 52-week high has been broadcaster ITV (LSE: ITV). The shares are up 16% in 2025 so far, outperforming both the FTSE 100 and FTSE 250 indices.
Quite a lot of this uplift occurred just last week and following the company announcing that it had beaten analyst expectations on total advertising revenue in the first half of its financial year. Although down 7%, this was actually better than the anticipated 8% fall.
In addition to strong demand for content made by its Studios arm, the market also cheered the progress made by management in finding an additional £15m of cost savings.
Cheap, but…
Despite this positive reception, ITV shares still change hands at a price-to-earnings (P/E) ratio of 10. That’s below average in the UK market. By contrast, the forecast dividend yield of 5.7% is far more than the majority of stocks.
At such a tempting price tag, there’s every chance that ITV’s share price could keep heading higher. I also wouldn’t rule out the possibility that the firm might eventually receive a bid or two for its Studios arm.
However, I still think there are significant challenges when it comes to growth. Younger generations no longer watch scheduled programming and even the £3.2bn-cap’s foray into streaming (via ITVX) hasn’t had much impact. Its dependence on the home market is another risk.
I think there are better opportunities for me to make money elsewhere in the market.
