3 Stocks Near 52-Week Highs Worth Selling

Even with the market giving back some of its pop from the past few weeks, more than 500 companies are within 6% of a new 52-week high. For optimists, these rallies may seem like a dream come true. For skeptics like me, they're opportunities to see whether companies trading near 52-week highs have actually earned their current valuations.

Keep in mind that some companies do deserve their current valuations. Liquidity Services (Nasdaq: LQDT  ) , a company that helps businesses and the U.S. government get rid of scrap and surplus products, has been on a tear, with economic hardships at a high and consumers on the lookout for a good deal.

Still, other companies might deserve a kick in the pants. Here's a look at three companies that could be worth selling.

Chef Boyar-doh!
To borrow a phrase from fellow Fool Rick Munarriz, ConAgra (NYSE: CAG  ) "stopped being great" years ago, and now might be the time to put this food behemoth back on the shelf.

Over the past decade both ConAgra's stock and its revenues have risen at a slow pace. Despite increasing the prices it charges and bringing in a new mix of food products, ConAgra has been unable to fend off the rising tide of inflation. In its latest quarterly report, the company alluded to an 11% jump in inflation, which more than outweighed any cost savings the company had put in place.

This isn't to say that ConAgra is going to lose money anytime soon; it's still a solidly profitable company. But it became clear with ConAgra's multiple unsuccessful bids to buy Ralcorp Holdings (NYSE: RAH  ) that it can no longer grow much, if at all, organically. The expiration date appears to have come and gone for the bulls on this trade, and I'd advise passing on this staple stock.

AT... ah-hem!
You know those non-brand ATMs you've used that charge you an exorbitant fee to get cash? Well, chances are decent that they were from Global Cash Access (NYSE: GCA  ) . You'd think the company would make a killing on this business -- especially being based in Las Vegas and inside most casinos. But don't judge this book by its cover.

Underneath these profits are a few troubling trends. The first began one year ago when the company lost its largest client. That undoubtedly contributed to Global Cash's 10% year-over-year drop in revenue in the third quarter. Second, Global Cash has missed Wall Street's estimates by double-digit percentages in six straight quarters. So, call me not-too-convinced when the company "reaffirmed guidance" in the most recent quarter. At less than eight times forward earnings, Global Cash appears cheap, but its revenue stream and consistency seem very much in question. This is one ATM that is not getting my business.

Tank you very much
Since being an operator of cargo tankers has been such a huge success recently (that's sarcasm, by the way), I thought this final spot should go to Golar LNG (Nasdaq: GLNG  ) . First fuel cells, then ethanol, now liquefied natural gas and anything associated with LNG is soaring -- some of it without much reasoning.

Golar's impressive (more sarcasm) fleet of 13 vessels do have the competitive advantage at present of providing Japan with LNG while many of its nuclear reactors are offline or still being repaired. Even so, this extra workload has done nothing to make Golar look anything like a value. At 86 times trailing-12-month earnings and negative free cash flow, Golar looks like a short-seller's paradise next to primary rival Teekay LNG Partners (NYSE: TGP  ) , priced at just 16 times earnings with positive FCF of $112 million.

Foolish roundup
With all three profitable, it took some digging to see the hidden flaws this week. Whether it's a lack of growth, losing a large client, or having yet to live up to expectations, all three of these stocks exhibit warning signs that make me want to yell, "Sell!" I'm so confident in these picks, I'm going to make a CAPScall on all three to the downside. The question now is, would you do the same?

Share your thoughts in the comments section below and consider adding ConAgra, Global Cash Access, and Golar LNG to your free and personalized watchlist to keep up on the latest news from each company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. Since he uses credit for everything he's almost forgotten what cash looks like. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Motley Fool newsletter services have recommended buying shares of Liquidity Services. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 that never needs to be sold short.

Read/Post Comments (3) | Recommend This Article (1)

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 December 14, 2011, at 5:14 PM, nivekluap wrote:

    Long GLNG since 2008. I've taken out my original investment (around June), and I'm going to hold on to the rest until the company says things are loosening up (their term for more ships available to ship LNG). Until then, I'm looking for better opportunities with the dividends they send my way. I, personally, don't care what the stock price does, as long as they keep raising the amount they give to me. According to what I've read on their web site, things should improve somewhat for 2 - 3 years.....SHOULD. Hoping for the best, but keeping an eye on the situation.

    FOOL ON!


  • Report this Comment On January 05, 2012, at 7:19 PM, surfergijoe wrote:

    Interesting....just read this about selling GLNG...when 5 minutes ago, read an article by

    Nathan Slaughter talking about GLNG being a"profitable investment for 2012"...who do you believe??

  • Report this Comment On February 27, 2012, at 4:08 PM, mortsmith wrote:

    I just noticed that TGP was at $32.21 when you suggested a sale, on 12/14.Today, it's at $40.28. Now what?

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Related Tickers

10/21/2016 4:02 PM
CAG $48.01 Up +0.53 +1.12%
ConAgra Foods CAPS Rating: ****
EVRI $2.40 Up +0.01 +0.42%
Global Cash Access… CAPS Rating: *
GLNG $24.00 Up +0.04 +0.17%
Golar LNG CAPS Rating: *****
LQDT $9.35 Down -0.20 -2.09%
Liquidity Services CAPS Rating: ****
RAH.DL $0.00 Down +0.00 +0.00%
Ralcorp Holdings,… CAPS Rating: ***
TGP $15.40 Down -0.20 -1.28%
Teekay LNG Partner… CAPS Rating: ****