3 Stocks Near 52-Week Highs Worth Selling

The rally since the beginning of the year has been more or less unrelenting, with more than 1,100 companies currently trading within 5% of their 52-week highs. For optimists, these rallies may seem like a dream come true. For skeptics like me, they're opportunities to see whether these companies have earned their current valuations.

Keep in mind that some companies deserve their current valuations. Nothing is a more hot-button issue than whether Apple (Nasdaq: AAPL  ) can keep up its torrid growth pace as its valuation approaches $600 billion. With a newly instituted $2.65 quarterly dividend, a $10 billion share-repurchase program, and more than 3 million new iPads sold in the first three days of release, it's hard to argue against owning Apple.

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

Not quite a banner year
Much of the banking sector finally appears to be on the mend, though some banks have further to go than others. Bank of America (NYSE: BAC  ) , a symbol of financing malfeasance throughout much of the recession, looks to be on the cusp of putting its foreclosure settlements in the rearview mirror. But the smaller regional banks are still leaving a lot to be desired despite the turnaround.

One such company is Banner Bank (Nasdaq: BANR  ) , out in my home state of Washington. The company has reported three straight profitable quarters, reduced its loan portfolio's reliance on single-family home loans, and cut its loan-loss reserves in half year over year. What's not to like, you might wonder? How about the fact that Banner still needs to repay TARP the $124 million it borrowed, and I simply don't see that happening without a dilutive share offering. I'm also not convinced that Banner has rid itself of enough non-performing assets. With the stock trading for right around book value and numerous other banks trading well below book, it's an easy trade-off to bypass Banner at these levels.

Finally, a natural gas sell candidate
I may be one of the biggest natural gas bulls of late, but even I draw the line at Clean Energy Fuels (Nasdaq: CLNE  ) . I think investing in natural gas fueling stations at this point in time is brutally premature. There's also the fact that I'd prefer to invest in companies turning a profit -- something that Clean Energy Fuels and its 257 CNG and LNG stations cannot currently say.

The truly damaging news this past week came from a combination of General Electric and Chesapeake Energy, which are teaming up to create 250 CNG fueling stations around the country, as reported by the Fool's own Travis Hoium. The market for CNG vehicles is still in its infancy, and another competitor is the last thing this company needed. I'm switching the nozzle to "off" on Clean Energy Fuels.

Triple-bogey
I admit that I'm just not a fan of golf, and that makes it easy for me to pick on Callaway Golf (NYSE: ELY  ) .

The maker of golf-related equipment has been in what seems like a continuous downward spiral since the recession. Callaway has missed Wall Street's earnings estimates in three of the past four quarters, and its losses have widened as a result of a business restructuring. If that's not enough, the company also recently went through a CEO change. It's incredibly tough to trust Callaway's turnaround when peers Nike and Under Armour are having no problem garnering new customers and getting top-notch ambassadors under their belt. Buying Callaway after its recent performance is like aiming directly at the bunker. Thanks, but no, thanks!

Foolish roundup
This is what I call a "prove it" week! These three companies have high expectations built into their stock prices, and I say you make them all prove their worth before you buy. I'm so confident in my three calls that I plan to make a CAPScall of underperform on each one. The question now is: Would you do the same?

Share your thoughts in the comments section below, and consider using the following links to add these three stocks to your free and personalized Watchlist so you can keep track of the latest news on each company. And to avoid investing in stocks like these, consider getting a copy of our special report, "The Motley Fool's Top Stock for 2012." In it, our chief investment officer details a play he dubbed the "Costco of Latin America." Best of all, this report is free for a limited time, so don't miss out!

Fool contributor Sean Williams owns shares of Bank of America but has no material interest in any other companies mentioned in this article. He didn't yell "fore" and ended up hitting someone in the back with a golf ball many years ago. 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.

The Motley Fool owns shares of Apple, Bank of America, and Under Armour. Motley Fool newsletter services have recommended buying shares of Apple, Nike, Under Armour, and Chesapeake Energy, as well as creating a bull call spread on Apple and a diagonal call position in Nike. 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 (17) | Recommend This Article (14)

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 22, 2012, at 9:09 PM, GWFHegel wrote:

    One of the Fools services has a buy, recently instituted, on CLNE. Why is that not mentioned?

  • Report this Comment On March 22, 2012, at 9:17 PM, wjcoffman wrote:

    Yeah, what he (GWFHegel) said.

  • Report this Comment On March 22, 2012, at 10:40 PM, iswhatitis wrote:

    I've said it before. It's good. It's bad. It's good. It's bad. I'm short. I'm long. Who is zooming who? Clne is a long term spec. Get over it! If you don't think they are manipulating --- Although, they do get it right once in a while. I've done well.

  • Report this Comment On March 23, 2012, at 8:48 AM, knightly101 wrote:

    I don't get it. I joined MFA because I know nothing about finance and to put my faith in someone who did.Well I've begun to notice that there is often a difference between ie,Daves picks and another writer for MFA. Great examples can be seen with Dave's picks,WPRT and CLNE. Who do we listen to?Do we flip a coin?Is this a cover your butt move by the MF?

  • Report this Comment On March 23, 2012, at 9:37 AM, foolgabby wrote:

    The investment world is always in flux and getting the heads up can mean turning a real profit or just spinning your wheels. Use your good judgement in the changing times, fellow fools.

  • Report this Comment On March 23, 2012, at 9:37 AM, XMFSharona wrote:

    @GWFHegel, @wjcoffman, @knightly101: Thanks for the comments! The Fool prides itself in allowing our writers and our services to operate independently of the others, and this can potentially lead to opposing views. For further info: http://wiki.fool.com/Motley. Hope this helps!

    --Sharon

    TMF Online Editor

  • Report this Comment On March 23, 2012, at 9:53 AM, bigalf123 wrote:

    I'm with the rest of you.I just paid to be guided to a stock pick only to learn that their real opinion is that I should have sold it instead. Much more of this and I'll get my advice from someone who at least believes the advice their giving.

  • Report this Comment On March 23, 2012, at 10:14 AM, RHinCT wrote:

    Besides the "operate independently" bit, which is quite true, take a look at the time line for both sides. The one that picked it was making a LONG TERM suggestion, while the one that dumped on it seems to have about a three month horizon - and that is looking back not forward.

  • Report this Comment On March 23, 2012, at 11:26 AM, hsalzber wrote:

    don't pay attention to this idiot..sales are booming at callaway because of the mild weather

  • Report this Comment On March 23, 2012, at 3:25 PM, GWFHegel wrote:

    I do think everyone needs to use his or her own discretion, because on every stock there are at least two opinions -- otherwise, you would not have a buyer and a seller.

    I was disappointed that a TMF article that had disclosures at the end did not disclose the TMF recommendation of the stock -- that is really my complaint.

    So, Sharon, my complaint is not with independence, it is with lack of full or accurate disclosure.

    Having said that, I generally follow David and Tom; so I don't have a real problem with disagreements, although they do make my ears (& brain) perk up!

  • Report this Comment On March 24, 2012, at 12:46 AM, dormouse1 wrote:

    GE/CHK are pusuing CNG. CLNEs primary focus is on LNG to support the 8 million Class A over the road semis. Those semis account for the equivalent use of 3 million barrels of oil per day. CHN and LNG are two different fuels suited to two different vehicle classes. CLNE is playing in the bigger & simpler business (LNG) and the economics of Class A switch over to LNG are almost irresistable. (CLNE does support local fleet operations that use CNG.....but LNG is the biggie). Long CLNE and a bunch of other misunderstood companies that will benefit from the Nat Gas revolution.

    If you haven't been to the CLNE web site to learn the business model you should. Also you might want to spend some time reviewing the video on: pickensplan.com

    As most financial advisors tell you, do your own research because half of what you read on these pages are opinions, speculation and the result of sloppy analysis.....not fact.

  • Report this Comment On March 24, 2012, at 6:27 AM, bczar87 wrote:

    I agree with GWFHegel... why is it not also disclosed that TMF recommended CLNE? I believe that if there is an opposing view between the Fools (which no doubt will happen and I am completly fine with), it should be mentioned and moreso their reasons why they disagree fully disclosed. I understand that they can operate independantly, but they are both MF contributors and it should be noted and explained any time a MF contributor disagrees with another contributor. Just my .02 as a paying customer

  • Report this Comment On March 24, 2012, at 8:21 AM, garyinpb wrote:

    It's disappointing that I purchased three years of TMF's newest "Premium Advice" SuperNova, which recommends CLNE, then a day after I purchase CLNE Sean basically tells the world to short CLNE. If you think I'm wrong, watch what happens Monday morning. I've already seen a major Financial Firm state they're recommending investors short CLNE.

    ....And it doesn't help that I come to find out on CNBC that Insiders have been selling. My "Premium Advice" See: HARD EARNED MONEY is already under water.

  • Report this Comment On March 24, 2012, at 8:48 AM, garyinpb wrote:

    It's disappointing that I purchased three years of TMF's newest "Premium Advice" SuperNova, which makes references to CLNE, (Dave & his brother discuss CLNE), then a day after I purchase CLNE Sean basically tells the world to short CLNE. If you think I'm wrong, watch what happens Monday morning. I've already seen a major Financial Firm state they're recommending investors short CLNE.

    ....And it doesn't help that I come to find out on CNBC that Insiders have been selling. My "Premium Advice" See: HARD EARNED MONEY is already under water.

  • Report this Comment On March 24, 2012, at 12:53 PM, garyinpb wrote:

    I need to correct my previous post. Tom & Dave discuss CLNE on the Stock Advisors site, not SuperNova. But for some reason, now that I'm a subscriber to SuperNova, my entire screen backround displays the SuperNova Galaxy, Stock Advisor's included.

  • Report this Comment On March 24, 2012, at 6:32 PM, TMFUltraLong wrote:

    GWFHegel & brianczarnecki87,

    As a courtesy to our premium newsletter subscribers, we do not disclose our newsletter recommendations in the disclosure section of our articles until one month after their selection. I hope this clears up some of the confusion as to why i didn't list Clean Energy Fuels as a recommendaiton in the disclosure section.

    TMFUltraLong

  • Report this Comment On March 25, 2012, at 12:17 AM, wjcoffman wrote:

    TMFUltraLong,

    That's what I was looking for as regards an explanation - thank you. Typically, when stocks are mentioned in an article there's a note afterwards stating something to the effect of certain of the stocks mentioned are recommendations of your services. Your article mentioned CLNE and I was aware of a recent newsletter Rec.

    I have NO issue with various FOOLish writers having varying opinions. It's that FOOLish quality that let's me know you're not hawking the next big thing to the benefit of someone under FOOLish employment.

Add your comment.

DocumentId: 1837050, ~/Articles/ArticleHandler.aspx, 4/17/2014 6:06:37 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement