Investment Capitalist

25 Good Short Candidates

Your reasoning behind your CVS short is fine, but your closing sentence: "should not be trading near their 52-week high." is a first line risk control measure that immediately eliminates this as a "good" short candidate for any professional trader I know, including myself. In a general bull market, we do not short stocks at, near or just above their 52-wk high. On the contrary, it's generally a good idea to buy in these situations, although I wouldn't want to own CVS for reasons you mentioned, as well as other internal research we have on the sector and CVS in particular. Remember markets will stay irrational longer than you can stay solvent.