It took more than two months, but the major indexes finally had their first major sell-off. Still, that hasn't stopped hundreds of stocks from nearing 52-week highs. For optimists, these rallies may seem like a dream come true. For skeptics like me, they're opportunities to see whether these companies have actually earned their current valuations.

Keep in mind that some companies deserve their current valuations. According to research group IDC, EMC (NYSE: EMC) retained its title of share leader for the external storage system market for the 15th straight year. Whereas total external storage sales grew by 10.6% in 2011, EMC grew its sales by 23.6% and boosted its market share by 350 basis points to 28.5%.

Still, other companies might deserve a kick in the pants. Here's a look at three companies that could be worth selling.

Anything you can do, I can do better
Not every company I look at in this series is a complete disaster. Take Finish Line (Nasdaq: FINL), for example, a footwear retailer that grew same-store sales by 7% through the first nine months of fiscal 2011. So why would I consider getting rid of Finish Line? Because the company can't hold a candle to rival Foot Locker (NYSE: FL).

In Foot Locker's recently reported quarter, the company reported same-store sales growth of 7.5% while finishing the year with inventory levels slightly higher than the year-ago period. Finish Line, on the other hand, boosted efficiencies, but did so with 20% less product on hand. With Foot Locker you also receive a dividend yield of 2.5%, versus Finish Line's, which is hovering around 1%. Finally, Finish Line repurchased about 5% of its outstanding shares through the first nine months of the year, while Foot Locker repurchased more than 3% of its outstanding shares just last quarter! If I have a choice, I'm taking Foot Locker every single time. And one final tidbit: Foot Locker is cheaper on a forward-earnings basis.

Profits are a pipeline dream
Again, I have nothing against BioCryst Pharmaceuticals (Nasdaq: BCRX), which is doing what it can to help produce groundbreaking treatments for influenza, gout, and hepatitis-C. Unfortunately, hope and reality are on two very different paths.

Since inception, BioCryst has accumulated a shareholder deficit of $354 million, and it currently has no revenue-producing products in its portfolio. Relying solely on collaborative revenue, the company does have two phase-three clinical trials for influenza and gout, but its success rate with the FDA isn't exactly encouraging to investors, as is evidenced by that large accumulated deficit. The company predicts it will burn through another $32 million to $38 million in net cash during fiscal 2012, leaving it with just $20 million to $25 million by year's end. I've warned against being caught up in the hep-C craze as well, and in BioCryst's case, it's not even out of pre-clinical trials yet. Do yourself a favor and make BioCryst prove its worth to shareholders first.

It's like mixing sodium and water
For some of you this might be asking you to think back pretty far, but do you recall what happens when you mix sodium and water together? I'll give you a hint...KABOOM! That's exactly how I equate mixing any sort of funding with California's gross mismanagement of funds. Meredith Whitney's call for Muni-geddon hasn't exactly come to fruition, but the state of California is once again nearly out of money, giving credence that her call may ultimately prove correct in spite of her poor timing.

Many of California's cities, including Stockton, are either on the verge of declaring bankruptcy or are dealing with large budgetary shortfalls. Up until now, municipal investments targeting California, such as the BlackRock California Municipal Income Trust (AMEX: BFZ), have rallied in spite of the possibility of default within the state. I personally don't see how this run will continue if California keeps finding itself in dire straits every three to nine months. I would suggest you ignore the dangling carrot that is a nearly 6% yield and run screaming in the other direction.

Foolish roundup
This week was all about living up to expectations. Finish Line can't seem to keep up with rival Foot Locker, BioCryst can't seem to stop bleeding red, and California can't get spending under control. That seems like a selling recipe if I've ever seen one. I'm so confident in my three calls that I plan to make a CAPScall of underperform on each one. The question now is: Would you do the same?

Share your thoughts in the comments section below and consider using the links below to add these three stocks to your free and personalized watchlist so you can keep track of the latest news with each company. Also, to avoid investing in stocks like these, consider getting a copy of our special report, "The Motley Fool's Top Stock for 2012." In it, our chief investment officer details a play he dubbed the "Costco of Latin America." Best of all, this report is free for a limited time, so don't miss out!