Monday, July 5, 2010

3 Stocks To Sell?

Often times when a bull market gets a little long in the tooth, the stocks that were heavy favorites are suddenly left in the dust. Other times, these stocks can simply get caught in a stock market reversal.

Here are 3 high flying stocks that Morningstar suggests might be due for a fall.

Opentable (OPEN)

Price/Fair Value Estimate: 2.3, YTD Total Return: 63%

Opentable offers an automated reservation system that allows restaurants to cut costs and become more efficient. It's certainly something that you could expect to do well in a recession, but at nearly two and a half times its Morningstar Fair Value Estimate it could be past its prime. It's also in a market with fairly low cost to enter, so its competative advantage may not be enough to protect it.

Cardiome Pharma (CRME)

Price/Fair Value Estimate: 1.6, YTD Total Return: 79%

Cardiome makes the heart drug Kynapid. Kynapid recently had some success with the FDA, but has come under some increased attent due to potential problems with a subset of the population. Drug stocks are always tricky for just this reason. Tread lightly.

SuccessFactors (SFSF)

Price/Fair Value Estimate: 1.8, YTD Total Return: 23%

SuccessFactors makes HR software, which is a relatively untapped market so it would seem to be nicely positioned. Unfortunately, it hasn't made a profit yet. That's not a bad thing for a speculative stock, but I like to know what I'm buying into has at least some value beyond that of stock.


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