5 New Highs Heading Lower

There were plenty of stocks making new 52-week highs last week -- 898 on the NYSE and 532 Nasdaq-listed companies, to be exact. Many of these stocks have padded their gains this week, since the major market indices have closed higher every day this week.

Momentum isn't always kind, though. Many of the stocks may be peaking, even if the signs aren't entirely visible to jubilant shareholders.

At the risk of coming off as a meanie, I'm going to single out five stocks from the "new highs" list that I think are coming down.

Let's lay them out, before I explain my concerns.

Source: Yahoo! Finance.

Let's go over the reasons to curb your enthusiasm with these overachievers.

Cumulus Media
Despite initial sniffs of an economic turnaround, I'm stunned to see a terrestrial-radio operator making new highs. Cumulus runs 350 radio stations around the country, and business is as bad as you can imagine.

Net revenue fell 18% last year, with free cash flow taking a deeper 39% plunge. Cumulus managed to post a narrower loss, but I'm not high-fiving any debt-laden company with a $126.7 million annual deficit.

To its credit, Cumulus has been sobering up. It has been aggressively hacking away at both its operating overhead and its interest expense. However, I don't see any reason for optimism going forward, especially for a stock that has soared sevenfold over the past year.

Cumulus feels that cyclical political advertising and a rebound in the auto market will help improve its prospects, but who is listening? Regardless of what you may think about Sirius XM Radio's (Nasdaq: SIRI) valuation as a stock, the cold reality is that satellite radio closed out 2009 with 18.8 million premium subscribers. It plans to close out 2010 with 19.3 million activated receivers.

This isn't just about the sheer number of listeners. We're also talking about the prime radio audience with enough discretionary income and time spent behind the wheel to pay for radio. In other words, it's the audience that advertisers truly covet.

Baidu
When China's leading search engine hit an all-time high two weeks ago, I expected it to go even higher. However, when Baidu's shares hit a new all-time high of $628.50 on Monday -- 20% higher than the pinnacle established a couple of weeks ago -- I had to catch my breath.

I'm a big fan of Baidu. I was fortunate enough to recommend it to Motley Fool Rule Breakers subscribers while it was still in the double digits four years ago. I also walked away quite impressed when revenue and earnings in its latest quarter soared 40% and 48%, respectively.

The rub is that Baidu's recent surge is basically the result of Google's (Nasdaq: GOOG) near certainty to leave China. This won't be the jackpot that Baidu bulls believe it to be. Google's departure will slow down the Internet's development in China. It may also alarm investors as they're educated on the country's restrictive ways.

Besides, Baidu already commands nearly two-thirds of the country's market share in search. Google's slice will likely be distributed among the smaller players and whichever stateside engine is opportunistic enough to step into its place.

At Monday's high, shares of Baidu were fetching 66 times this year's projected profitability and 45 times next year's net income target. Baidu has proven worthy of lofty multiples in the past, but there is greater geopolitical risk to discount now.

Netflix
I've owned Netflix for nearly eight years, but I'm not going to be overly biased. Yes, Netflix thrived during the recession as it built its audience to 12.3 million subscribers through the end of last year. Yes, it recently struck an online streaming deal that should lower its digital delivery costs in the near term.

However, I'm still irked by its decision to delay Warner Home Video releases by four weeks and the broken promise of broader availability. (The Time Traveler's Wife has been on "Long Wait" -- in my queue, at least -- since its release over a week ago.)

I still love the Netflix product and think its overall streaming strategy is untouchably shrewd. However, it will ultimately lead to more subscribers trading down to the cheapest $8.99-a-month unlimited plan. I'm also skeptical about its decision to expand internationally later this year as a way to bump its ceiling higher.

Live Nation
I have always preferred Live Nation's business to the fading prerecorded music industry. I also think its recent Ticketmaster acquisition was the right move. However, there are reasons to be skeptical about the touring industry in general.

The Internet has leveled the playing field, opening up the future to a greater number of artists achieving modest success instead of only a handful of superstars playing in large venues. Don't even get me started on the reportedly $250 million Michael Jackson deal that was inked with Sony Music -- one that won't involve touring, naturally.

Analysts see Live Nation barely breaking even this fiscal year, but let's turn our attention to next year when Ticketmaster will have been in the bloodstream long enough to create an apples-to-apples comparison. Wall Street expects a profit of $0.18 a share, but on a 3% decline in revenue. Investors will expect more on the bottom line -- and headier growth on the top -- to justify these highs.

News Corp.
I know Avatar was a major coup for Rupert Murdoch's media empire, but this isn't a recurring event. In the meantime, News Corp. is stuck with print publishing's struggles, an ill-conceived online pay-wall strategy, and MySpace's stagnancy.

There are thankfully a few things going right for Murdoch, but they're not the game-changing catalysts that should be propelling his global multimedia portfolio toward new highs at the moment.

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