Stocks to Avoid Now?

If you're thinking of selling your stocks, you're not alone. According to insider tracker Form 4 Oracle, executives at these three firms cashed in shares last week:

The week's selling

Company

Closing Price 1/22/09

Total Value Sold

52-Week Change

Apollo Group (Nasdaq: APOL  )

$87.44

$44,115,889

19.9%

Contango Oil & Gas (AMEX: MCF  )

$45.90

$1,470,159

(21.3%)

Cantel Medical (NYSE: CMN  )

$14.53

$512,501

20.3%

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle.

Insiders sell for many reasons, from compensation, to estate or tax planning, to just plain getting out, but they rarely (if ever) explain their motivation. That said, these are open market sales, made by executives who have 100% control over the timing of their trades. Not so at Martha Stewart Living Omnimedia (NYSE: MSO  ) and BigBand Networks (Nasdaq: BBND  ) , whose insiders have mostly been cashing in on a predetermined schedule known as a 10b5-1 trading plan.

Firms typically find their way here because those selling either (a) exhibit good timing, or (b) are dumping significant portions of their stakes. Cantel Medical has seen insider selling before, but Alan Hirschfield, company vice chairman and well-known investor, is the seller this time.

Hirschfield boasts an intriguing record. Big buys of Leucadia National (NYSE: LUK  ) from 2005 and 2006 likely haven't worked out as well as he'd prefer, but Hirschfield has been a star seller of Cantel since 2004, at prices greater than $20 a share.

Cantel has performed well over the past 52 weeks, and it's earning acclaim from some of the top investors in our 125,000-plus Motley Fool CAPS community. They like the prospects for medical-device makers. "I am big believer in any company that is associated with the medical industry because that company should always have something to sell and someone to buy," wrote CAPS All-Star jbeavers14 in October.

Fair point. Perhaps Hirschfield is selling to diversify? Let's hope so.

Showtime's over for Apollo?
Continuing education is proving to be a growth market in recessionary times. That's hardly surprising; displaced workers need to find new skills, and ITT Educational Services (NYSE: ESI  ) and Apollo Group's University of Phoenix are happy to oblige.

Especially Apollo, which blew away earnings estimates in its most recent quarter. Yet our CAPS community still isn't impressed:

Metric

Apollo Group

CAPS stars (5 max)

*

Total ratings

731

Percent Bulls

78.1%

Percent Bears

21.9%

Bullish pitches

104 of 142

Data current as of Jan. 23, 2009.

A student-led lawsuit may be part of the problem. At issue is whether the University of Phoenix is manipulating what's called a "cohort default rate" and thus protecting its eligibility to offer the government-backed student loans responsible for more than 75% of its revenue.

CAPS All-Star FunesDMemorious is also concerned about competition. "Whatever you think of the quality of education at any of the schools, if a state school allows you to get a diploma that says "University of [State Name]" vs. University of Phoenix I think it is a no-brainer which one you choose," that Fool wrote last week.

I doubt that company founder John Sperling, or his son, Peter, would agree. But both are selling. Together, they sold more than $40 million worth of stock last week. I expect others to follow in their profit-taking footsteps.

There's your update. See you back here next week for more stocks you should avoid.

The inside scoop on further Foolishness:

Fool contributor Tim Beyers also writes for Motley Fool Rule Breakers. Tim didn't own stock in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool.

The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is the undisputed heavyweight champ among disclosure policies.


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