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3 Stocks Near 52-Week Highs Worth Selling

Sean Williams
September 27, 2012

Protests in Greece and Spain dipped the market, but hardly enough to make a sizable difference in the vast amounts of stocks trading near a 52-week high. 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. Regional bank Hudson City Bancorp (Nasdaq: HCBK  ) continues to trickle higher following a $3.7 billion buyout offer from M&T Bank. The deal should immediately add to M&T's earnings and is a nice boost for Hudson City shareholders, who've seen their stock struggle since the recession.

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

A daily double
We're not on Jeopardy!, but Alex, I'm going to start us off with a daily double on Comcast (Nasdaq: CMCSA  ) (Nasdaq: CMCSK  ) . "What's the difference between the two classes of shares?" you ask? CMCSA shares allow for voting rights while CMCSK shareholders get no voting rights -- that's the only difference.

Comcast shares are nearing an all-time high, having taken advantage of miscues from DISH Network, which is currently in a legal battle with AMC Networks over a failed programming deal. Comcast has been aggressively adding high-speed subscribers and pushing its high-margin digital TV platforms with moderate success.

Why I'm negative on Comcast here has to do with its valuation relative to its peers, the likelihood that its peers will adjust to regain lost market share, and consumers' overall opinion of the business. I'm fully aware that AT&T and Verizon offer significantly more diversified products than Comcast, but I'm simply unwilling to pay 16 times forward earnings for a company that'll likely grow in the low-to-mid single digits organically. Second, I don't see how DISH, DIRECTV, or even Internet streaming companies are going to allow Comcast to dominate the pay-for-TV market. DISH's unique and short-term problems are really giving Comcast its biggest boost at the moment. Finally, I don't think there's a more universally disliked company by consumers than Comcast. Word of mouth can be your friend or your enemy, and I just don't see Comcast outperforming from here with such negative sentiment surrounding its service.

Tongue and chic
I recall reading, near the end of August, an Associated Press article on a key metric rising for retailer American Apparel (NYSE: APP  ) and thinking that the only metric that should be rising there is the potential for an abrupt reversal of fortune. Since reporting a 24% increase in year-over-year same-store sales, American Apparel's stock has tacked on about 55%, and I'm as negative as ever on the teen-focused clothing company.

American Apparel's CEO, Dov Charney, noted strength across all major market segments, but also pointed to the need for tighter inventory management and store renovations that are needed to drive sales. I'd like to counter with the fact that American Apparel has never done a particularly good job at managing its inventory levels and has relied on heavy discounting to move its merchandise. In addition, consumer spending is falling, which is hurting some of its closest competitors, like Aeropostale. Final