Time to Cash In: 3 Stocks to Sell at 52-Week Highs

Many large investors tend to sell stocks that are near or above their 52-week highs in order to lock in the profits they’ve generated. Moreover, stocks that reach the plateau could indeed be overvalued, given the large gains, in most cases, that they’ve generated in the preceding weeks. As a result, it’s a good idea for investors to at least sell a portion of their holdings of these stocks in order to take some of their profits on these names. Additionally, these three stocks to sell are all in the travel sector, which appears, as I’ll explain in detail below, to be potentially reaching a peak of its own.

Also worth noting is that the stock market itself has rallied a great deal in a short time this year and may be due for a short-term correction soon. That’s especially true because we’re now in the heart of the summer, which tends to be a seasonally weak period for stocks.

With all of that said, here are three stocks to sell that are at or near their 52-week highs.

Marriott International (MAR)

Hotel owner and operator Marriott International (NYSE:MAR) reached a 52-week high of $187.12 on July 7.

But there are multiple signs that consumers’ spending on travel has begun to weaken. For example, Citi cut its price target on American Express (NYSE:AXP) last month to $148 from $150, citing card data that indicated that “travel and entertainment spend” is indeed decelerating.

Even more ominously for MAR, “Hotel prices have recently climbed much more slowly on a year-over-year basis” in March and April than earlier in the year, The New York Times reported recently.

And the newspaper quoted the founder of the research firmInflation Insights as saying that “We’re just not getting the same kind of pop any longer” in hotel prices as earlier in the year.

What’s more, Marriott’s forward price-earnings ratio of 22.78 is not exactly very cheap at this point.

American Airlines (AAL)

American Airlines (NYSE:AAL) is in many ways in the same boat as MAR. Like the hotel operator, the airlines reached a 52-week high on July 7 and benefited tremendously from Americans’ “revenge travel” following the termination of the lockdowns that had been out in place during the pandemic.

And just like Marriott, American Airlines could be hit by a slowdown of the revenge phenomenon. Indeed, research firm Inflation Insights stated that it expects airfares to push down the Consumer Price Index going forward, The New York Times reported recently. That, in turn, indicates that the firm expects airfare increases to drop significantly going forward.

Also boding poorly for AAL, the US. Travel Association reported on June 29 that “Air travel demand appears to have stabilized somewhat” while “Overseas arrivals made little improvement and remained 26% below 2019 levels in May.”

Carnival (CCL)

Cruise ship operator Carnival (NYSE:CCL) on July 7 climbed as high as $19.46, just slightly below its 52-week high of $19.55.

Carnival’s outlook has undoubtedly improved a great deal in 2023, as worries about the coronavirus, for all intents and purposes, have disappeared. Consequently, in the first quarter, the company’s net revenue yields surpassed the levels generated in Q1 of 2019, and it even generated positive cash from operations.

However, the firm still expects to report a loss per share this year of 8 cents to 20 cents, and the company could very well be hit by the same slowdown of “revenge spending” on vacations that look poised to affect Marriott and American Airlines.

Also noteworthy is that the company’s “debt load has more than tripled in the last five years,” with higher interest rates making that burden especially difficult and dangerous. The combination of rates  continuing to rise and vacation spending slowing could create a dangerous situation for Carnival. At the very least, those two phenomena are likely to put a significant dent in CCL stock.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.       

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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