We're officially just days away from the kickoff of earnings season, and the market simply refuses to stop marching higher. 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. AT&T
Despite running the risk of being gang-tackled by both the Motley Fool Rule Breakers and Motley Fool Hidden Gems advisors, I think it may be time to take your profits and run on Chipotle Mexican Grill
The company has been and remains an outperformer in the restaurant sector, but rising food costs are set to eat into its bottom line. As fellow Fool Rich Duprey pointed out earlier in the week, corn and wheat prices have ascended to record highs, and even Chipotle commented that costs are running higher than in 2010. True, the entire sector will be dealing with rising input costs, but investors have come to expect a significant level of outperformance from Chipotle. Any dropoff from its recent growth rate could spell disaster for Chipotle, which may cause investors to rush for the exits.
Tempting ... NOT!
Next up is Anworth Mortgage
Anworth pays out its dividends depending on how much profit it generated during the previous quarter. Before last week's release, quarterly distributions had fallen four quarters in a row. Meanwhile, the housing market continues to struggle, with recent data also showing a 22.5% freefall in housing starts in January. Compound this with KB Home's
All that's silver does not shine
I know this might be hard to believe, but not all silver companies appear to be good investments. I think Fools should particularly steer clear of MAG Silver
This silver mining company is still in the exploratory stages of its existence, while rival silver plays Silver Wheaton
What's your take on the companies mentioned here; hold them or fold them? State your case in the comments section below, and consider tracking my predictions by adding Chipotle Mexican Grill, Anworth Mortgage, and MAG Silver to My Watchlist.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He would like to remind that our friends in Japan could use a helping hand. You can follow him on CAPS under the screen name TMFUltraLong. The Fool owns shares of Chipotle, which is a Motley Fool Rule Breakers pick and a Motley Fool Hidden Gems 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's disclosure policy never needs to be sold short.