Strong corporate earnings this week continue to propel the S&P 500 to new multiyear highs, with seemingly no end in sight. For bulls, these rallies may seem like dreams come true. For skeptics like me, they're opportunities to see whether companies trading near their 52-week highs really deserve their current valuations.
Keep in mind that some companies deserve their lofty prices. Shares of Apple
Green Mountain over-roasted?
Green Mountain Coffee Roasters
Also, more than one-quarter of the company's float is currently held by short-sellers, so this rally could be fueled more by short-covering than actual earnings momentum. Usually, short interest this high is a yellow flag to investors to stay clear. Shareholders may want to heed that warning.
Lulu a lemon?
I find it very hard to believe that lululemon will be able to come close this year to the 29% same-store sales jump it delivered last quarter. That's strike one. I'm also concerned about just how much residual business the company will get. It has drawn in a solid crowd of affluent first-time buyers, but how much athleticwear does one person need? That's strike two. Finally, Gap
Buy and it could Hertz
Rental-car company Hertz
Have an opinion on any of these companies? Let's hear about it in the comments section below!
Fool contributor Sean Williams does not own shares in any companies mentioned in this article. He admits to being a Starbucks junkie, and doesn't really know what the inside of a gym looks like. You can follow him on CAPS under the screen name TMFUltraLong. Green Mountain and lululemon athletica are Motley Fool Rule Breakers recommendations. Motley Fool Alpha has opened a short position on Green Mountain. The Fool has written puts on and owns shares of Apple, which is a Motley Fool Stock Advisor selection. The Fool also owns shares of lululemon athetica. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy which never needs to be sold short.