If you look overseas, growth has been dreadful. International bookings dropped 29% in the fourth quarter because of weakness in Japan and Germany. The company is basically winding down its in-person presence in many locations and replacing it with an online-only presence, which will save costs, but not necessarily boost sales.
Rosetta Stone Inc (NYSE:RST) plans to rely on its products’ innovation to drive growth, but I contend that its previous innovations with an in-store presence weren’t driving rapid growth to begin with. At 56 times forward earnings, I’m suggesting you say “nyet” to buying Rosetta Stone.
Three times the danger
Every few weeks I scour the list of new highs, and every few weeks I’m flabbergasted by the number of Direxion triple-levered ETFs that are sitting near a new high.
This week, the Direxion Daily Real Estate Bull 3x is clear in my crosshairs following a phenomenal 500% run over the previous four years. It’s not that I don’t believe the housing and commercial rental sector is slowly improving — since this ETF tracks MSCI REIT index to a factor of three — but the scale by which investors expect the REIT environment to continue to improve just isn’t reasonable. It has taken an exceptionally strong move upward in the MSCI REIT index to provide investors with these returns, and I highly doubt it will be able to keep up this pace.
Another factor that often gets overlooked with triple-levered funds is that even when the underlying index provides flat returns, daily rebalancing can work against investors. Even with its amazing returns, this is yet another highly levered fund I would suggest leaving on the shelf.
Foolish roundup
Nothing would describe this week’s theme better than “Really?” I feel Neurocrine’s lack of near-term catalysts, Rosetta Stone Inc (NYSE:RST)’s lack of sales growth, and a projected inability for Direxion’s Real Estate 3x Bull ETF to keep up its impressive returns thus far all provide more than ample reason to avoid all three stocks.
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 Rosetta Stone. The Motley Fool recommends Automatic Data Processing and Rosetta Stone.
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