Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

3 Stocks Near 52-Week Highs Worth Selling: Toll Brothers Inc (TOL), Sun Communities Inc. (SUI)

Page 1 of 2

Even with the house of cards tumbling down on the housing sector yesterday, and the threat of the central bank purchasing fewer Treasuries and mortgage bonds, well over 200 companies still notched a new 52-week high. For skeptics like me, that’s an opportunity to see whether companies have earned their current valuations.

Keep in mind that some companies deserve their current valuations. Network equipment provider Cisco Systems, Inc. (NASDAQ:CSCO), for instance, dazzled Wall Street with another quarterly earnings beat last week. Cisco, even with the weakness of Europe weighing on its future, projected sales growth of 7% to 8% in 2013 as it continues to transition to cloud-based hardware.

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

Sun Communities Inc (NYSE:SUI)The sun is setting on this company
I’m not quite sure how crazy you have to be to bet against a real estate investment trust in the red-hot housing sector, but apparently I’m there! Sun Communities, Inc. (NYSE:SUI) is an owner of manufactured housing communities primarily in the Midwest, South, and Southeastern U.S. As a REIT, it’s required to pay out at least 90% of its profits as a dividend to shareholders. Between the economic rebound and Sun’s 5.5% yield, shareholders have enjoyed a nice ride since the bottom. Furthermore, Sun’s funds from operations forecast for 2013 of $3.45 to $3.55 per share was ahead of the $3.38 consensus.

Yet I feel there are plenty of reasons to jump ship right here. The biggest concern I have with owning a manufactured housing REIT would be that low rates would either tempt prospective homebuyers into purchasing a house or keep them in their apartments and saving up for a home. Manufactured homes are sort of in a middle ground until lending rates begin to rise, which, I feel, will crimp Sun’s growth opportunities from an organic basis in the interim.

Also, even with its impressive cash flow, Sun’s $1.23 billion in net debt would cause me to sleep poorly at night. Sun’s business model, at least at the moment, necessitates it continue to make acquisitions in order to spur FFO growth. Unfortunately, these acquisitions are only going to further drive up its debt levels. With Sun at roughly 13 times projected FFO, shareholders are left with very little room for error.

If you’ve got an issue, stay away from this tissue
The paper business is far from exciting, but sometimes the least exciting businesses make for the best long-term investments. However, tissue, paperboard, and pulp producer Clearwater Paper Corp (NYSE:CLW) is not on that list — at least for me!

Clearwater Paper reported its fourth-quarter earnings last night and, while surpassing EPS estimates by $0.08, it fell short on revenue estimates by $5.4 million. Cost synergies from its purchase of Cellu Tissue helped reduce its total expenses, yet overall net selling prices of its non-retail tissue, as well as its paperboard and pulp, fell from the previous year.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!