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Tickers in this Article: SKX, NKE, WMT, TGT, SHLD
Footwear company Skechers (NYSE:SKX) is trading right near its 52-week high. But is this the time to take some profits off the table or climb aboard?

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Reasons To Slip On Skechers
Skechers is a very popular name and it deserves some recognition for that. In addition, it's done a good job exceeding analyst expectations this past year. If it continues to do that, the shares could continue their run.

Later this month the company is scheduled to release its third quarter numbers.Wall Street is looking for it to earn 34 cents. And my sense is that it will likely beat that expectation. The shares could get a boost because of a rekindled interest from momentum investors that could push the company to receive positive research.

The Downside
While things seem to be going well, investors may be anticipating that the company will be able to keep the surprises coming. The problem is that companies can rarely keep pulling off surprises quarter after quarter and if and when it fails to live up to expectations, its shares could be hit hard.

While consumers are spending a bit more and seem more confident than at this same point last year, I believe that they will be cautious with their overall spending. Consequently, a good many people could be shopping discounters like Kmart (Nasdaq:SHLD), Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) as they all sell footwear at very low prices. Of those companies by the way, Target is probably my favorite right now. With solid EPS growth expected from this year to next, the shares could hit a new 52-week high in the short run.

At present Skechers is expected to earn 46 cents in 2009 and 97 cents in 2010. To be fair, if achieved that would be pretty remarkable growth. But then again it would be from a low base.

Also, for a company that trades at around $20, its numbers aren't that appealing. It trades at a little more than 43 times this year's estimate and at a little more than 20 times next year's estimate and in my mind that is entirely too pricey. The fact is I'd much rather check out Nike (NYSE:NKE), which trades at a comparatively low 17 times this year's estimate. It too has done a good job beating estimates.

The Bottom Line
Skechers has had a very good run and it may continue for a bit. But if the company stumbles, misses expectations or if investors start to pay attention to the lofty multiples it trades at, I think it could tumble. (For another take, see Analyst Forecasts Spell Disaster For Some Stocks.)

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