Do you ever get the feeling that bulls outnumber the bears by a wide margin? Greek one-year bonds touched a yield of 139% earlier in the week, and yet dozens of companies are nearing new 52-week highs. For optimists, 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 have actually earned their current valuations.
Keep in mind that some companies deserve their lofty valuations. Shareholders of ONEOK Partners
Still, other companies might deserve a kick in the pants. Here’s a look at three companies that could be worth selling.
Customers, at any price
I’m not purposely trying to pick on every triple-digit P/E company in existence, but the valuation at athenahealth
As Foolish colleague Dan Caplinger pointed out a few weeks ago, athenahealth differs greatly from medical record and billing solution rivals McKesson
Running on empty
Making money from low-margin fuel has always been a tough business -- just ask shareholders of Casey’s General Stores
Its first-quarter report was soured by two key figures, as I see it. First, the company fell short of Wall Street’s expectations for the second time in the past four quarters. The company blamed rising expenses and weak gasoline sales as the reason for the earnings shortfall. Perhaps even more worrisome, gross margins fell for the fifth consecutive quarter over the year-ago period. This, more than anything else, explains why Casey’s earnings figures aren’t up to par. Until Casey can reverse its declining gross margin trend, I’d recommend driving right by this stock.
Aisle pass, thank you!
Hopefully I don’t go under the community guillotine for this, but what are people actually seeing in PriceSmart
The company appears priced for perfection at 26 times forward earnings and a whopping 29 times cash flow. While I know I’d be giving up growth and even a net margin advantage, I’d easily choose Wal-Mart
It’s not often three sell recommendations stem from three companies growing by double-digits, but that was exactly the case this week. Keeping an eye on sector comparisons and margin rates can often give us clues as to whether a company is being set up for long term success or simply a flash in the pan move higher.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong. The Motley Fool owns shares of Wal-Mart. Motley Fool newsletter services have recommended buying shares of Wal-Mart, McKesson, and ONEOK Partners, as well as creating a diagonal call position in Wal-Mart. 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 that never needs to be sold short.