Mylan Inc. (MYL), YY Inc (ADR) (YY): Stocks Near 52-Week Highs Worth Selling

No a-Capella to be seen here
Ask me about one sector that I pretty much wouldn’t touch with a 10-foot pole and online education is likely going to be my answer. Despite increasing government scrutiny within the sector, Capella Education Company (NASDAQ:CPLA), the owner of Capella University, has seen shares surge to a two-year high after reporting marketing-topping second-quarter results. But if you ask me, this company could be a lot closer to a dunce cap than the honor roll among investors.

For the quarter, Capella Education Company (NASDAQ:CPLA) delivered a 12.7% increase in year-over-year enrollments, which invigorated investors in spite of a 2.3% decrease in revenue and a $0.02 drop in EPS from the year-ago period to $0.83. Both figures still slid past the Street’s estimates. To me, this looks like nothing more than rewarding a company for reporting bad results that were a bit “less bad” than expected. Tighter government regulations governing which post-secondary companies qualify for loans and how companies can market to students are still in place, and the public image of many of these companies is still pretty marred.

For Capella Education Company (NASDAQ:CPLA), it would need to deliver some relatively sizable growth if it has any hope of maintaining its forward P/E of 19, yet sales growth estimates for next year are just 2.5%. A smart investor would take this lack of growth as more reason to leave Capella to the speculators.

Foolish roundup
You could certainly say that this week’s theme is all about counting your chickens before they’re hatched. I feel pretty confident that YY Inc (ADR) (NASDAQ:YY)’s rising expenses will constrain shareholder expectations moving forward; that Prosensa Holding NV (NASDAQ:RNA)’s drug may be in for more competition and a slower launch than traders realize; and that the reality of Capella’s slow growth is going to catch up with investors’ high hopes for a rebound in the for-profit education sector.

The article 3 Stocks Near 52-Week Highs Worth Selling originally appeared on Fool.com.

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 has no position in any of the stocks mentioned.

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