The number of weekly new highs is slipping, but this doesn't mean the cream of the crop is clawing its way to the top.

There are actually plenty of flawed companies that continue to eke out fresh 52-week highs, and undeservedly so.

I may come off as a heartless killjoy, but I see a few companies that hit highs in the past week and are likely to head lower in the coming weeks and months.

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


May 18 Close



OfficeMax (NYSE: OMX)




Netflix (Nasdaq: NFLX)




Coinstar (Nasdaq: CSTR)




TreeHouse Foods (NYSE: THS)




Source: Yahoo! Finance.

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

No one has to sell me on the merits of office supplies bouncing back during an economic recovery. I get it. I'm just shocked that the stock of one of the weaker players in this space is soaring.

Staples (Nasdaq: SPLS) is the stud in this niche, yet it's actually trading closer to its 52-week low than its 52-week high.

What's so special about OfficeMax? Last week it announced that adjusted earnings for its latest quarter skyrocketed, but it's simply the result of shrewd cost-cutting. Sales actually were flat, bogged down by a 2.5% decline in retail same-store sales. Yes, traffic at the store level hasn't picked up, even when stacked against last year's depressed levels.

OfficeMax expects to close more stores than it opens this year. It also plans to close a call center in Wyoming this summer, another sign that business isn't exactly picking up as the economy shows signs of life.

As a longtime shareholder of the DVD rental darling, I've been subjected to wild price swings. I hold on, because it's hard to bet against a company that continues to profitably tack on new subscribers.

However, three analysts downgraded the stock after it hit new highs last week. I think they'll be wrong in the long run, but I definitely think Netflix is vulnerable now.

The stock has nearly tripled over the past year, overrunning the company's fundamentals. I think Netflix will continue to grow at a healthy pace, but I think the ramifications of holding back new releases from most of the major studios for 28 days -- something being aped by Coinstar's Redbox, but not by Blockbuster (NYSE: BBI) -- will leave a dent.

Netflix's push to online streaming is ambitious, but it may be contributing to subscribers opting for lower-priced plans.

The company behind the namesake coin-swallowing machines should probably rename itself Redbox. After all, DVD revenue now accounts for all but a quarter of Coinstar's revenue. In its latest results, Redbox revenue also increased 70% from the year-ago quarter.

Striking studio deals to delay new releases for four weeks will result in cheaper discs, but it should also affect demand. Netflix can hide behind its unmatched depth of older catalog titles or the thousands of films available through its streaming service, but Redbox is cuffed to hot releases being spit out for $1 a night through its machines.

Blockbuster has also taken on the Redbox challenge, quickly hitting the market with 4,000 Blockbuster Express kiosks.

Redbox may have a pricing advantage over pay-per-view and traditional DVD rentals today, but it's a model that will be made obsolete by fast-moving advances in digital technology.

TreeHouse Foods
I was a big fan of TreeHouse Foods last summer, when the economy was still reeling. The maker of private-label supermarket staples was at the right place at the right time, as shoppers traded down to cheaper store brands (manufactured by TreeHouse).

If folks trade down during a recession, do they trade back up during a recovery? It's happening at the world's largest retailer. Discounter Wal-Mart (NYSE: WMT) has now posted four straight quarters of negative same-store sales in the U.S. after coasting through the recession.

Why should TreeHouse be any luckier? Analysts are still high on the company. They see earnings growing 22% and revenue growing 23% this year, before slowing next year. I'm not as optimistic. I think the consumer shift back to household brand names will happen this year and that TreeHouse's tailwinds will become headwinds.

Wal-Mart is a Motley Fool Inside Value recommendation. Netflix and Staples are Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz realizes that you don't know you've hit your peak until you're going downhill. He does not own shares in any of the companies in this story, except for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.