It felt awkward watching Martha Stewart leave jail last week to begin the house-arrest portion of her sentence. I mean, there she was, serving up hot chocolate to the reporters and claiming that the one thing she had missed the most was fresh lemons, and all I kept thinking was: Is this woman for real, or is this yet another orchestrated ploy to help prop up the shares of Martha Stewart Living Omnimedia (NYSE:MSO)?

Ever since her fate was sealed this past summer, the stock has more than tripled. The shares are highly unlikely to match that incarcerated return. In fact, I wouldn't be surprised if the stock is trading lower a year from now. Actually, what I mean to say is that I would be surprised if it was trading higher.

No, I'm not from the camp that thinks Martha's company is going to zero. Her merchandise has served Kmart (NASDAQ:KMRT) well, even if the typical Kmart customer has probably never nibbled a petit four or labored over a crown-molding installation.

I just think that investors shouldn't read too much into her temporarily amplified public persona. The expectations are high right now, but one has to realize that this company was coming undone long before Martha was caught bailing out early on her investment in ImClone Systems (NASDAQ:IMCL).

Martha's company hasn't turned an annual profit since 2002. Earnings had peaked a year earlier, and the company is valued at more than 70 times those profits. It's not just the bottom line: Revenue clocked in at $296 million in 2001, but the company was good for just $187 million last year. It has scaled back a bit over the years, and the stock is priced -- even after Friday's dip -- at levels that can only be justified if the company performs at a level higher than its personal best.

Doing that won't be easy. Yes, come autumn, reality television guru Mark Burnett has Martha hitting the primetime stage with a spinoff of The Apprentice. Donald Trump has used his success with the original show to roll out lots of tied-in merchandise -- everything from business suits to fragrances. That's great. The only problem here is that Martha is already a brand. Even if Kmart's being absorbed into the Sears (NYSE:S) bloodstream brings expanded opportunities for Martha's brand, it will need a greater level of fame to drive that kind of retailing panache home. Unfortunately, that's also the kind of hot celebrity status that ultimately proves fleeting.

Will things even get that far? I love The Apprentice, but I saw what Disney's (NYSE:DIS) ABC did to Who Wants to Be a Millionaire? and I believe that General Electric's (NYSE:GE) NBC may be falling into the same trap by overexposing the franchise.

Back in November 2002, our Motley Fool Stock Advisor newsletter recommended the shares when the stock was trading in the single digits. Yes, it was a great call, even if our popular stock-picking service got cold feet when the company wasn't showing any fundamental improvements and closed out its position with only a 50% gain.

Buying in early isn't what Martha Stewart Living Omnimedia shareholders are doing these days, with the stock trading at these lofty levels. Martha may have missed her lemons in prison, but her latest batch of investors will know all about lemons in the near term.

Need five tips to spruce up your home reading?

  • Yes, Martha will be the next star on The Apprentice.
  • She also has another show being produced by Mark Burnett.
  • Check out Seth Jayson's critical piece on shares of Martha's company.
  • Are you the next Martha? Chat it up in our Crafty Fools discussion board.
  • Check out the latest winning recommendations in our Stock Advisor service.

Longtime Fool contributor Rick Munarriz believes that Martha is worthy of a second chance, so he's going to watch the new show. He does own shares in Disney. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.