The melt-up rally appears to be back in full swing on Wall Street, with investors pushing the Dow Jones Industrial Average back within 225 points of a new multiyear high. 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. Take Gammon Gold
Shareholders of Dollar Thrifty Automotive
Avis agreed to purchase Dollar Thrifty for $45.79 in cash and 0.6543 shares of Avis stock -- valuing the company at $57.41 per share based on yesterday's closing price for Avis. Dollar Thrifty closed yesterday at $63.45, a 10.5% premium over Avis' buyout offer. I'm no math genius, but without an unexpected higher bid, these numbers don't bode well for longs.
Honey, I don't
Diamonds are forever, but gains in Harry Winston
The company highlighted that Asian demand was one of the key drivers for growth over the past year, which could prove a double-edged sword considering the bearish forecast we witnessed from luxury diamond retailer Tiffany
Green in the face
Alternative energy generation is bound to be a popular investment after the near-meltdown of the Fukushima Dai'ichi nuclear reactors following the Japan earthquake. Fellow Fool Seth Jayson reminds us, though, that not all green solutions will be the correct answer and that Capstone Turbine
Capstone has been burning through investors' money for years. Shareholders have endured numerous secondary offerings and have watched as shareholder equity in the company has gradually dwindled. Capstone's dilemma is that customers seem to prefer larger turbines rather than the many small turbines it manufactures to generate the equivalent amount of energy. It looks to me like an uphill battle that longs will probably not win.
What's your take? Buyer beware or just click the buy button since everything is going up anyway? Share your thoughts in the comments section below and consider supercharging your investing prowess by adding these and your own personalized portfolio of stocks to My Watchlist.
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