3 Stocks Near 52-Week Highs Worth Selling

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Apparently, even oil cresting $100 a barrel isn't enough to keep this market from surging higher. For bulls, these rallies may seem like a dream come true. For skeptics like me, they're opportunities to see whether companies trading near their 52-week highs really deserve their current valuations.

Keep in mind that some companies deserve their lofty prices. Applied Materials (Nasdaq: AMAT  ) has been on a tear lately, thanks to renewed bullishness in spending on semiconductor equipment. Intel (Nasdaq: INTC  ) announced in January that it anticipates spending $9 billion on capital expenditures this year, a marked jump over the $5.2 billion it spent last year, and is a big catalyst behind Applied Materials' move. But some companies potentially deserve a kick in the pants. Here's a look at three companies that could be worth selling.

Mmmmm, bear claw
Undoubtedly, the Stock Advisor team wouldn't agree with me, but I don't see how Panera Bread (Nasdaq: PNRA  ) can get through the next two years without feeling a commodity margin pinch. The company thus far has been able to pass along rising wheat and coffee prices to consumers. But as prices at the pump continue to soar, I have to feel that as a premium restaurant, consumers may bypass their trips to Panera in favor of a stay-at-home meal.

Panera has consistently performed well up to this point, but with input costs rising and the stock already valued at nearly six times book value, investors may be wise to wait for a significant pullback before taking another bite.

A Stern warning
I can honestly say I'm not a huge fan of large, diversified media companies, but putting my biases aside, three of Liberty Capital's (Nasdaq: LCAPA  ) investments have me thinking "sell."

First, Liberty holds a 40% stake in the highly indebted Sirius XM (Nasdaq: SIRI  ) which I've highlighted before as a serious debt concern. Second, Liberty Capital increased its stake in Live Nation (NYSE: LYV  ) despite the company's continued bearish view on overall ticket sales and fewer concert tours in the near future. Finally, I question Liberty's own decision to buy back its stock, rather than work on paying down its $2 billion in allocated debt outstanding. Decisions like these could have shareholders scratching their heads.

Christmas in March
If I didn't know any better, I'd say it was Christmastime for shareholders of KV Pharmaceuticals (NYSE: KV-A  ) . KV received approval for Makena last month. The drug, developed in partnership with Hologix, is designed to reduce premature births in women who've had past problems. Its stock has risen more than 500% since then. KV has taken advantage of the drug's approval to sell new shares in a private placement, and it now plans to raise $200 million in private debt financing.

Bringing a drug to market doesn't happen overnight. It takes time, money and a skilled sales team. Investors should be cautious about buying into a company that has risen nearly vertically for a month now.

What's your take on these stocks? Do they have room to run higher or are they near a peak? Share your thoughts in the comments section below.

To track my calls, add Applied Materials, Intel, Panera Bread, Liberty Capital, Sirius XM, Live Nation, KV Pharmaceuticals, or Hologix to My Watchlist.

Panera Bread is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Intel, which is a Motley Fool Inside Value selection. The Fool owns shares of and has bought calls on Intel. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Sean Williams does not own shares in any companies mentioned in this article. He recently tried satellite radio for the first time and prefers XM stations 52 and 54, if you were curious. You can follow him on CAPS under the screen name TMFUltraLong. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy which never needs to be sold short.

Read/Post Comments (27) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 04, 2011, at 2:00 PM, ddentino wrote:

    Your headline says 3 stocks yet the article mentions 6 and is vague about which are the three to be sold.

    This appears to be more like a grab for mindshare than a specific recommendation.

  • Report this Comment On March 04, 2011, at 2:43 PM, southernbeachguy wrote:

    "Putting your bias aside", I don't think you were successful.

    ETHICAL writer don't write about companies that they are bias about, especially when you are SO WRONG, Sirus has been one of the top performing stocks in percentage gains for the past 2 years.

    If you had been recommending Sirus for the past 2 years you would have made your readers a lot of money. My 115,000 shares have gone up 307% over the past 2 years. What have you recommended that has done that well?

    You and Alyce are not writes, you are bashers and I am sure with some motive generated by NAB.

    Just my more educated thoughts.

  • Report this Comment On March 04, 2011, at 5:35 PM, Austin77478 wrote:

    Sean, when are you going to give up this your nonsense about Sirius? The more you tried to bring it down, the more it appreciates in value. Do you know the percentage of the stockholders that entertain your rubbish? Anecdotally, I would say 0.000001 %.

  • Report this Comment On March 04, 2011, at 5:50 PM, kmacattack wrote:


    I believe you were bashing SIRI nearly a year ago when I decided to ignore you and bought 15,000 shares at an average of $1.01. it's, lets see, $1.81 today, and I've cleaned up selling puts when Siri pulled back a little. You failed to mention that SIRI paid off a considerable amount of debt last year, improved their investment rating status and was able to re-negotiate other debt to much more favorable terms. I think you also failed to mention that they topped 20 million subscribers by year end, and they have only scratched the surface of the Hispanic speaking market, Europe and Asia, and it's all coming in the future without adding a huge amount of debt. The infrastructure is in place already. Profit margins increase with every new subscriber. Did you mention that anywhere? I'll give you a prediction today. Unless oil prices go crazy and absolutely kill car sales, SIRI will be up at least $1.00 more by year end, making me another $15,000 this year, plus options profits. This is one of the best run companies in the nation, maybe in the world. Siri-it's all good!

  • Report this Comment On March 04, 2011, at 7:59 PM, ItAintCool wrote:

    Motley Fool has become "ALL SIRI BASHING! ALL THE TIME!"

    Alex DuMortier, Jim Royal, Alyce Lomax and Sean Williams couldn't pick a 35 bagger like SIRI if their life depended on it. They missed out, now they want those who are invested to give up their opportunity to make bigger profits as the climbs beyond 2$ and beyond. They are not fools, they are frauds! Let them praise and pump Pandora until it hits the pink sheets and falls into BK.

    For well informed and FACTUAL articles about SIRI try

  • Report this Comment On March 05, 2011, at 7:35 PM, zukerman wrote:

    I'm curious as to why 61 people would follow your message. Do you have any original thoughts on stocks to invest in? In your bio you say your portfolio is comprised of 4-12 stocks, yet you only hold two short positions if I remember correctly. In your bio where it asked experience, you entered [High]. Most often they and I would be looking for the number of years, what's to hide? You list under former jobs that you were a financial adviser with First investors of New York, guessing your advice wasn't that good. I'm thinking we'll call you [short stroke] considering all you seem to have time to write about is companies that have managed a decent run of late. With your BA in tow you've managed just two jobs since college other than a loose association with some jewelry store. I'll not be making it 62 as if it wasn't obvious to you. When does the real work begin for you? How about sharing some stocks that you personally looked into for a change instead of just regurgitating the headlines with a few words changed.

  • Report this Comment On March 05, 2011, at 9:02 PM, TheDumbMoney wrote:

    I LOVE THE SIRIUS COMMENTERS!!!! You guys are hilarious. I'm sitting here working on a Saturday, I come on the Fool for a break, and you totally make my day!!!

    Fool, is there any way I can get an RSS feed of all articles mentioning Sirius, just so that I can read the commenters? Awesome, hilarious, classic. Or can we do a compilation, perhaps have someone read them and then have Sirius create a channel for them?

    That said..., though I'm not a Sirius shareholder and do not plan to become one, some very smart people are in charge there, people with names like Malone, and Karmazin. S&P gives it 4-star buy rating, as of today. Morningstar gives it an unenthusiatic but un-apocalyptic 3 stars, largely as a result of moat concerns.

    I gots cyurius, so I looked at the 10k, Sirius retired a bunch of its highest-interest debt in 2010. With the XM purchase it's not going to need a bunch of new satellites anytime soon, which means not a ton or new debt anytime soon. In 2010 it showed its first ever profit, or the first in at least five years that I looked at. The PEG ratio is 0.5. And it is or was holding $8 billion in tax net operating loss opposed to that $3+ billion in long term debt.

    What companies have benefitted most from the Fed's policies over the last two years? Crap companies with tons of debt who got to refinance it at artificially cheap rates. What company is exhibit A in that category? Sirius. Positive free cash flow for the first time in 2010, too.

    Now, am I a buyer? No. Too speculative for me. In addition to all the risks we commonly think of, how far off is the day when music is just streamed to cars via cell phone towers? I don't think it's as crazy as you think it is, and it would render SIRI's capital investments and its business model irrelevant.

    But until that or some similar day, which is at least five years off, this is simply not the same company people were analyzing at end-2008, and if that's the last time you seriously looked into it, you need to look again. This has the feel of a company that turned around in 2010, that became something else. It's balance sheet is bad, bad, bud, but go back and look at AMZN's balance sheet in 2001. Did you? Wughawughawugha! And look what happened there, the seeds had already been sown. Now I don't think SIRI is Amazon, but I also know that car companies actually advertise the fact that it is offered, and I also don't think it's going the way of the dodo anytime soon. (And when I have used it, it has actually been a good product.)

    An interesting project would be to see just how much of its debt Sirius managed to cash and/or refinance in 2010, how much did it lower its weighted average interest rate it paid, and perhaps equally importantly, how far out in the future did it extend those obligations, lo during this era of easy debt. What would be really funny is if Sirius managed to get a bunch of sub-6% bonds from yield-starved lunatics. It would not surprise me at all if it did.

    Okay, enough time wasted. Cheers all.

    I'm not kidding about that RSS feed....

  • Report this Comment On March 05, 2011, at 9:14 PM, TheDumbMoney wrote:

    A further word on that "$8 billion in tax net operating loss carryforwards". I don't know when those expire. Also, if certain events happen, the company looses them. Still, this is a company that just turned profitable, and absent one of those events it will pay no taxes on the first $8 billioni in profits, if they happen fast enough. It's like GM, without the pension liabilities.

  • Report this Comment On March 06, 2011, at 12:37 AM, bottomfisherman wrote:

    I think dumberthanafool should have his or her lol own column here on MF so much more informative then the drivel put out from those aforementioned in one of the other posts!!!

  • Report this Comment On March 06, 2011, at 1:22 PM, TheDumbMoney wrote:

    bottom, thanks, though I just want to be clear that I'm a huge fan of Sean's (TMFUltralong), and not actually a fan of the SIRI commenters, and I'm not fit as an investment analyst to blow the dust out of Sean's keyboard. However, I do think in this case he has perhaps not sufficiently evalated the 1) turnaround implications, 2) 2010 debt-refinancing benefits, and 3) tax carryforward issues I identified above. Specifically, for example, if SIRI turns solidly profitable, and if it can apply those carryforwards, those tax savings alone will nearly wipe out its debt, and absolutely will wipe out more than 2/3 of it, if that is how SIRI spends the savings.

    Of the other hand, that's a lot of ifs, which is why I don't own the company's shares.

  • Report this Comment On March 06, 2011, at 4:41 PM, TheDumbMoney wrote:

    Ha, reading a bit more on Sirius today and came across the Munnariz article -- that Sean actually linked to in this piece -- which talks all about the carryforwards. So basically, I added nothing. Which is kind of funny. Sigh.

  • Report this Comment On March 06, 2011, at 7:05 PM, Austin77478 wrote:

    dumberthanafool, are you thinking of owning the stock of Sirius? You seem very interested in it. If not, why are you researching into it?

  • Report this Comment On March 06, 2011, at 8:01 PM, TheDumbMoney wrote:

    Austin, I just get curious sometimes. Everything I did above took around an hour over two days, including writing my stupid-long post about things Munarriz had already discussed.

    I am not thinking of buying it, as I stated above. I just finally decided yesterday to see if I could understand the hullabaloo a little better, since it is clearly a water-cooler stock, and inspires passion. It's not really about SIRI per se, I just like looking at financial statements and seeing if I can figure out whatsupwithem. Also, as to SIRI, while I am...bemused by the emotional reactions about SIRI-lovers (of which I think you are one), I really wanted to see if there was some substance behind that vehemence, since the vehemence rarely in my experience appears to be accompanied by much substance. My conclusion is that: 1) SIRI is far from the dead-man-walking it sometimes seems like it presented as, which I said above; 2) but all of the best *long-term* gains have likely been had; 3) there is WAY too much uncertainty both in its business model and in its capital structure for me to be a buyer. In this market, I would never short it though. Five years out, I honestly think it's a coin flip whether it becomes a low-debt juggernaut, or goes bankrupt. I don't do coin flips. Kudos to those who really flipped the coin during the crisis, but if it were me I would sell the vast majority of my gains, give myself a high five, and look elsewhere. But I'm a non-professional with a 24 CAPS score, so what I think is really of little moment.

  • Report this Comment On March 06, 2011, at 10:00 PM, Austin77478 wrote:

    Dumberthanafool -

    "Also, as to SIRI, while I am...bemused by the emotional reactions about SIRI-lovers (of which I think you are one), I really wanted to see if there was some substance behind that vehemence, since the vehemence rarely in my experience appears to be accompanied by much substance." There is just something surreptitious about you. One thing in my opinion that may affect this stock would be the energy crisis in the Middle East affecting the U.S. economy. Another of your diatribe is, "Five years out, I honestly think it's a coin flip whether it becomes a low-debt juggernaut, or goes bankrupt." I would prefer you put your money where your mouth is, by buying the stock or shorting it. A lot of people just talk the talk, but do not walk the walk.

  • Report this Comment On March 07, 2011, at 10:41 AM, TheDumbMoney wrote:

    Austin, if you don't think a simple decision not to buy a stock is not walking the walk, I don't know what your conception of investing is. Every decision to purchase or not to purchase is an investment allocation decision, made as between competing priorities. At this time I see better opportunities than SIRI, by which I mean, opportunities for better risk-adjusted returns. My entire CAPS portfolio here at the Fool, which I invite you peruse and mock, is composed of my actual real life positions, and they are my only real life positions, so I think I know a thing or two about walking the walk.

  • Report this Comment On March 07, 2011, at 11:39 AM, Austin77478 wrote:

    dumberthanafool! Again, why are you interested in the stock that you are not thinking about buying or shorting?

  • Report this Comment On March 07, 2011, at 12:07 PM, TheDumbMoney wrote:

    Austin, as I explained, it was because of all of the passion expressed about it. And, I did not START OUT uninterested in buying or shorting, I started out intrigued by S&P's 4-star ranking, as I already stated above....

    I BECAME uninterested in either buying or shorting because of the analysis I already laid out above, not that it even should matter. I am interested in all kinds of stocks I'm not interested in buying or shorting. That is because, as astounding as this may seem to you, I'm just generally interested in stocks, and companies, and investing, as I already explained above, and because I have zero axes to grind.

    Of course, since this is the entire point of CAPS, where the vast, vast majority devote lots of time to rating stocks up or down that they do not actually own, either because they have no interest in actually owning them, or no money, the fact that I would devote time to analyzing any company I don't own really should not be a huge shocker to you, and frankly I'm surprised it does. Maybe you should go back and review the whole entire point of the CAPS game on this website.

    In sum, I am interested in coming to conclusions based on my exploration of the facts, not the reverse....

  • Report this Comment On March 07, 2011, at 12:30 PM, TheDumbMoney wrote:

    Austin, I also see now you have no actual CAPS picks at all. Way to walk the walk, bud!!

  • Report this Comment On March 07, 2011, at 12:39 PM, Austin77478 wrote:

    I must have hit a nerve, dumberthanfool!

  • Report this Comment On March 07, 2011, at 12:47 PM, BearishKW wrote:

    I totally agree, these SIRI cheerleaders are LAUGHABLE.

    At TMF stocks will get criticized AND touted...sometimes even in the same day. There is no other stock that brings out defenders and cheerleaders like SIRI. It's painful to see. Because while I do believe it's a good company on it's way, in terms of it's stock all I see is a bandwagon of underinformed speculators who picked up x-thousand shares because it's a well-known company and it's only trading at $1. "Who cares that high frequency day traders control it's destiny, and it trades in line with the volume of megacaps? It's only 1 dollar!"

    That is not investing. And the second they become bored with it, these people are out of the stock in droves.

  • Report this Comment On March 07, 2011, at 12:50 PM, TheDumbMoney wrote:

    No, I just wanted to know if there was anything behind you or if you were just hot air. That is also a conclusion I have now reached based on my exploration of the facts.

    Best of luck with your SIRI holding, I hope it's a 10-bagger from here and that SIRI thus becomes a $100 billion market cap company, which would make it larger than Abbot, McDonalds, Honda, Altria, Amazon, Disney, Goldman Sachs, and Qualcomm, to name a few..

  • Report this Comment On March 07, 2011, at 1:13 PM, Austin77478 wrote:

    dumberthanafool, I do not beat around the bush. If I want something, I go for it. If I am not interested in something, I don't waste my precious time in dabbling into it. "I hope it's a 10-bagger from here and that SIRI thus becomes a $100 billion market cap company, which would make it larger than Abbot, McDonalds, Honda, Altria, Amazon, Disney, Goldman Sachs, and Qualcomm, to name a few.." Didn't I mention earlier that there is something surreptitious about you?

  • Report this Comment On March 07, 2011, at 1:30 PM, TheDumbMoney wrote:

    Surreptitious? I really have no idea what you are talking about. I'm honestly curious about that. What secret agenda do you think I have? Spell it out.

  • Report this Comment On March 07, 2011, at 1:59 PM, Austin77478 wrote:

    dumberthanafool! One's writing is like a fingerprint. Your making fun of Sirius' by saying "I hope it's a 10-bagger from here and that SIRI thus becomes a $100 billion market cap company, which would make it larger than Abbot, McDonalds, Honda, Altria, Amazon, Disney, Goldman Sachs, and Qualcomm, to name a few.." pretty much gave you away. You've literally claimed perspicacity about picking stocks, and I wish you good luck!

  • Report this Comment On March 07, 2011, at 4:27 PM, TheDumbMoney wrote:

    I am not sure you know what surreptitious means, as a matter of fact I'm quite confident you don't.

    I'm not making fun of Sirius. However, I was making fun of anyone who thinks Sirius is going to be a ten-bagger in the near future, from where it sits now, by giving context as to what that would mean -- it would make the company more valuable than Amazon. That's just a fact, it would, and that's not in my view going to happen anytime soon.

    There was nothing "surreptitious" about that though, since I am not hiding any motivation, and since it was based on my prior analysis above in this very thread.

    Yes, I have "claimed perspicacity about picking stocks," which is a totally separate issue. Congratualtions, I'm glad you were able to work that one out! By so-claiming, I am in the company of every single other user of this site including yourself.

  • Report this Comment On March 07, 2011, at 9:07 PM, Austin77478 wrote:

    dumberthanafool! This is going to be my last response to your logorrhea. I am reiterating that there is something surreptitious about your take on Sirius. If your ambivalence and dithering also help you make a good stock picks, more power to you. Personally, I am unequivocal at making my decision one way or the other. Have a great week!

  • Report this Comment On March 08, 2011, at 10:52 AM, TheDumbMoney wrote:

    Go with god, dude, arguing with you is like playing whack-a-mole. Go look up the word 'surreptitious' some day if you really want to blow your mind.

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