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Altisource Portfolio Solutions S.A. (ASPS), Cabelas Inc (CAB): Three Stocks Near 52-Week Highs Worth Selling

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The American markets may be decisively off their all-time highs, but that hasn’t stopped some 1,800-plus companies within The Motley Fool CAPS database from being within 10% or less of 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. Watch-and-accessories provider Movado Group, Inc (NYSE:MOV), for instance, reported stellar second-quarter results earlier this week, which saw sales rise 17% as operating income jumped 59%. Perhaps even more important for shareholders, Movado Group, Inc (NYSE:MOV)’s board approved a 60% increase to its quarterly dividend to $0.08, from $0.05, pushing its new projected yield to 0.7%.

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

Altisource Portfolio Solutions S.A. (NASDAQ:ASPS)

Unrealistic expectations
The construction industry may have found a floor with lending rates near historic lows, but I don’t think that’s going to be enough to save software developer Textura from keeping its current market value.

On one hand, I can certainly see the value in Textura’s collaboration software, which allows contractors to take care of everything from estimates and design to submittals and payment all on one platform. In Textura’s third-quarter results, it delivered 65% sales growth, and saw a 235% increase in subscription-based (i.e., recurring) revenue.

However, the time for growth has come and gone with the now-imminent likelihood that the Federal Reserve is going to begin paring back its $85 billion in monthly bond purchases before the year is out. These purchases have been instrumental in keeping lending rates low, but the threat of QE3 removal earlier this year sent mortgage rates higher by better than 100-basis points from their May low. With higher mortgage rates come considerably less incentive for homebuilders to build, and enterprises to take on debt to expand their business and purchase office buildings.

That’s bad news for Textura, which isn’t currently profitable, and isn’t expected to be profitable until 2015 or beyond, thanks to ballooning expenses. At 26 times trailing 52-week sales, and roughly 10 times book, I’d suggest passing on Textura.

Its strength is also a weakness
Similar to Textura, Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), a software-solutions provider, has benefited from exceptionally strong mortgage activity. In Altisource Portfolio Solutions S.A. (NASDAQ:ASPS)’s most recent quarter, the company delivered a 37% increase in service revenue — almost entirely from its mortgage service business — as it benefited from Ocwen Financial‘s purchase of the mortgage servicing rights from OneWest, and the expectation that Ocwen will continue to aggressively go after more mortgage servicing rights opportunities.

While I wouldn’t discount Altisource Portfolio Solutions S.A. (NASDAQ:ASPS)’s growth last quarter, I also feel that, if shareholders were to expect this same rate of growth moving forward, they’d be sorely disappointed. As I discussed above, the end of QE3 is more than likely going to have a negative impact on lending rates and the mortgage industry, which has the potential to reduce Altisource Portfolio Solutions S.A. (NASDAQ:ASPS)’s mortgage service revenue over the long run. If Altisource can emphasize its technology services, it may be able to support this valuation, but I feel that’s highly unlikely, with most technology spending still tepid at best.

At its current valuation, Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) is trading at 16 times forward earnings, but an alarming 17 times book, and close to five times trailing 12-month sales. I don’t consider Altisource a strong sell candidate here, but I don’t see any reason why this should be trading in triple digits, either.

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