5 Newly High Stocks Heading Lower

There were plenty of stocks making new 52-week highs last week -- 395 on the NYSE and 252 Nasdaq-listed companies to be exact, according to Barron's. It's an impressive sum, compared to the handful of equities tickling their 52-week lows.

However, a stock in motion doesn't necessarily stay in motion. Several of the stocks delighting their investors right now may actually be peaking.

I'm sure I won't be making too many friends with this column, but 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.
*Adjusted for one-time cash distribution in March 2009.

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

Time Warner Cable
Time Warner's cable spinoff hit a new high last week, once you adjust for a beefy cash distribution last March. Am I the only one that isn't all warm and tingly about the future of cable television?

I can't be. Time Warner Cable's video subscriber count has shrunk over the past year. The company may be making it up in DVR (digital video recorder) services and price hikes to deliver meager gains, but it remains to be seen the role that old school cable providers will play in a digitally-delivered tomorrow.

Time Warner Cable is certainly taking its best shot. It's doing better with its digital voice and broadband connectivity offerings than it's faring on the boob tube. However, this is a company with a net debt position of a whopping $21.3 billion. This is the kind of leverage that will backfire as customers continue to tire of percolating programming costs at a time when Facebook and YouTube are consuming more and more of their disposable leisure time.  

Berkshire Hathaway
I'm a big fan of Warren Buffett, but let's be realistic here. There are more than a handful of reasons to not be sending Berkshire Hathaway up the stratosphere these days:

• Berkshire Hathaway's annual performance in 2009 -- in terms of book value per share gains -- fell short of the S&P 500 for the first time since 2004.
• Most of the recent share gains are the result of Berkshire Hathaway finally breaking into the S&P 500. This is the kind of zero-sum jockeying that has to irk Buffett, since little has changed at his company beyond being gobbled up by index funds. This will make the stock more susceptible to market swings as a whole.
• Buffett isn't getting any younger. I counted roughly three dozen instances of "Charlie and I" in the Buffett's annual shareholder letter over the weekend. I'd view that as a sign of Buffett illustrating that managing the portfolio is a two-man approach rather than an act of gradually passing the baton, but Munger isn't getting any younger either.
• The company has gotten so big that it's left with little choice but to overpay for behemoths. No offense Burlington Northern, but it's true. Even Buffett has lamented the headier gains he'd be able to score if Berkshire Hathaway was smaller.

Domino's Pizza
It's not every day that a company launches an ad campaign to illustrate how bad its product used to be, spends the last few weeks gnawing margins by offering its new and improved medium pies for $5.99 apiece, and is still hailed as the next best thing since hand-tossed dough.

Over the past year, Domino's has lost dozens of company-owned and franchised stores domestically. It's more than making that up in overseas expansion, but I can't be the only one concerned about the loyalty of customers once the $5.99 promo ends.

This is a cutthroat business. Domino's would be shrinking stateside if that wasn't the case.

Weight Watchers
The first three names on the list went on to extend their 52-week highs yesterday, but not Weight Watchers. The dieting-plan specialist was slammed on Friday after posting disappointing financial results.

Revenue fell throughout 2009, and adjusted earnings of $2.68 a share were less than the $2.77 a share it earned in 2008. Unfortunately, it doesn't appear as if 2010 will get any better. Citing a "challenging" environment, Weight Watchers is expected profitability to take it on the chin yet again this year, targeting net income per share between $2.25 and $2.50.

This just isn't a very appealing sector at the moment. Last night's grim report out of NutriSystem (Nasdaq: NTRI) is that company's ninth consecutive quarter of year-over-year dips in profitability.

LCA-Vision
Some companies head higher by besting Wall Street expectations, but that doesn't necessarily apply to LCA-Vision. The company behind LasikPlus laser vision correction services has missed analyst guesstimates in seven of the past eight quarters.

Comps at its vision centers are off by a third over the past year, a sharp drop off that can only be partly explained by the moribund recession. An economic rebound will help, but LCA-Vision closed a dozen centers last year with no near-term plans to open new locations.

LCA-Vision hasn't turned an annual profit since 2007, and analysts don't see that changing in 2010.