Yesterday, we may have witnessed the beginning of the first sizable correction in the stock market since July. Nothing can go straight up, but for bulls, these rallies may seem like a dream 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 Semtech (Nasdaq: SMTC) leapt to new 52-week highs this week after reporting better-than-expected earnings driven by demand for its semiconductors. The company's first-quarter guidance also surpassed consensus estimates. But some companies potentially deserve a kick in the pants. Here's a look at two companies near 52-week highs that could be worth selling, as well as a struggling company that may never see 52-week highs again.

Pigging out
Pork producer Smithfield Foods (NYSE: SFD) hit new highs this week after reporting a quadrupling of its quarterly profit because of increased pork demand. Unfortunately, input costs for feeding its livestock are rising and could mark the end of this bullish run.

Smithfield anticipates feeling a margin pinch from grain prices in the coming year and cautioned investors that it will need to raise its own prices in order to maintain margins. With tax season around the corner and consumers still very cautious with their spending habits, it wouldn't surprise me to see Smithfield's profits dip as consumers rotate to chicken, which may be a considerably cheaper alternative. As Jim Cramer says, bulls make money, bears make money, and pigs get slaughtered. Smart investors may want to take some gains off the table at these levels rather than risk being taken to the chopping block later.

Virtual reality
Online gaming company Shanda Interactive (Nasdaq: SNDA) makes the list this week after posting its fifth consecutive earnings miss last week. While its business has a five-year projected growth rate of 10.7%, its rivals look considerably cheaper when compared with its forward P/E of 22.

NetEase.com (Nasdaq: NTES) for example, sports a considerably higher five-year projected growth rate of 16.9% despite carrying a much lower valuation, while Shanda Interactive's online gaming spin-off Shanda Games (Nasdaq: GAME) trades at a mere nine times forward earnings and is, to top it off, debt-free. Shanda Interactive may not be a sell based on its balance sheet, but it's clearly not the top value in the online gaming sector.

I think I-Cahn?
Although Dynegy (NYSE: DYN) is well short of striking a new 52-week high, it's a must-include this week after its own management warned of a potential bankruptcy filing. Dynegy's management feels that unless it's able to restructure its heavy debt load, it may be forced to seek bankruptcy protection.

Even more interesting, shareholders -- including hedge-fund Seneca Capital, Dynegy's second largest shareholder behind Carl Icahn -- turned down a takeover bid by Icahn's firm for $5.50 a share last month. I really don't know who deserves a slap on the head here more: Icahn, Seneca Capital, or Dynegy management. Either way, this looks like a situation to avoid until Dynegy can successfully refinance its debt.

Do you have an opinion on the companies mentioned here? Feel free to share your thoughts in the comments section below and consider adding these and your own portfolio of stocks to the easy-to-use and free My Watchlist.

Fool contributor Sean Williams does not own shares in any companies mentioned in this article. He enjoys pork but admits he's a sucker for home-cooked BBQ chicken. You can follow him on CAPS under the screen name TMFUltraLong. NetEase.com is a Motley Fool Rule Breakers selection. 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.