3 Stocks Near 52-Week Highs Worth Selling: Pier 1 Imports, Inc. (PIR), Kforce Inc. (KFRC)

Where’s the beef?
My kudos and congratulations to staffing company Kforce Inc. (NASDAQ:KFRC) for trouncing Wall Street’s expectations in the fourth-quarter, but where’s the beef behind these numbers?

For the quarter, Kforce reported $269.8 million in revenue and a profit of $0.24. Expectations had only called for the company to earn $0.22 on $267.6 million in revenue. However, revenue fell by 5.5% year-over-year and adjusted GAAP earnings sank by 15% — hardly a reason for the share price to explode higher by double-digits as my Foolish colleague Travis Hoium so astutely pointed out. Even Kforce’s first-quarter forecast of $268 million to $274 million in revenue and a profit of $0.09-$0.12 failed to meet the current consensus of $275.5 million in revenue and $0.14 in EPS.

Staffing companies have been basically battening down the hatches and utilizing share repurchases and cost-cutting tools to artificially boost EPS, and Kforce is no different. On one hand, it is doing what it can to enhance shareholder value through buybacks and a special dividend, but all it’s really doing is masking the fact that enterprises aren’t hiring much, if at all, and that’s bad news for staffing companies like Kforce with shrinking prospects. The risks simply outweigh the rewards with this company.

Foolish roundup
This week it’s all about innovation and differentiation — something I’m inferring none of these three companies possess. Pier 1’s close ties to the housing sector and economy, as well as OfficeMax and Kforce’s lack of sales growth, make these three stocks portfolio liabilities with far too much risk for my own taste.

I’m so confident in my three calls that I plan to make a CAPScall of underperform on each one. The question is: Would you do the same?

The article 3 Stocks Near 52-Week Highs Worth Selling originally appeared on Fool.com and is written by Sean Williams.

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, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Staples.

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