3 Stocks Near 52-Week Highs Worth Sellinghttp://www.fool.com/investing/general/2012/09/13/3-stocks-near-52-week-highs-worth-selling.aspx Sean Williams
September 13, 2012
Between Mario Draghi and the European Central Bank's plan to buy bonds of member EU nations to improve liquidity and the growing likelihood that the Federal Reserve will introduce a third round of quantitative easing, the markets keep marching higher without fail. For skeptics like me, that's an opportunity to see whether companies have earned their current valuations.
Keep in mind that some companies deserve their current valuations. High-power fiber-laser and amplifier company IPG Photonics (Nasdaq: IPGP ) has been in full rally mode ever since reporting blowout second-quarter results at the end of July. IPG noted a 23% rise in net income and announced it sees strong demand going forward despite macroeconomic uncertainty.
Still, other companies might deserve a kick in the pants. Here's a look at three companies that could be worth selling.
Bad for your health
Simply put, Annie's growth rates are nowhere near robust enough to keep up with its lofty valuation. Annie's first-quarter results that highlighted a 20% increase in sales and 17% jump in net income were solid, but don't justify a forward P/E of 45 or a price-to-book of 11. Instead, I'd consider trading Annie's for a better value within the sector, Hain Celestial (Nasdaq: HAIN ) . Hain is actually poised to outgrow Annie's this year based on revenue, and trades at closer to three times book value and just 24 times forward earnings. Hain also boasts a considerably more diverse natural and organic food product line than Annie's. For Hain the math makes sense; for Annie's it doesn't -- it's as simple as that.
Heading down the drain?
Considering that the full implementation of the Affordable Care Act is less than two years away, I see the potential for Medicare reimbursements falling and Vitas' costs rising as pretty likely. I also don't see any catalysts for the company's plumbing business, which keeps dragging down its results. If I were Chemed, I'd honestly consider selling the plumbing side of its business and focusing solely on its hospice operations, which offer safer long-term growth. Over the last three quarters, Chemed has