What It Is:
How It Works/Example:
If you observe the market prices for a given security during a specific period of time, there will be a price that is the highest price over that time period. The 52-week high for the price of any actively traded security is the maximum price over the course of the previous year (or previous 52 weeks).
To illustrate, suppose you are looking at changes in the market price for company XYZ's common stock over the previous year. You find that XYZ's common stock traded at $150 exactly one ago and trades at $175 today. However, at one point during the year, the price of the stock was $200. The stock's price never equaled nor exceeded this value again for the duration of the time period. Therefore, $200 is the stock's 52-week high.
Why It Matters:
The 52-week high serves as an indicator for potential investors. Investor's will often reference the 52-week high for a stock when looking at the current price. If the price is near or approaching the 52-week high, it might not be a good time to buy, because the stock could be overvalued. Also, if a stock is near its 52 week high, this may be a signal that it is a good time to sell.