Cablevision Systems Corporation (CVC), Hewlett-Packard Company (HPQ): S&P 500’s Top 3 Performers: Is it Time to Sell?

The S&P 500 (INDEXSP:.INX) is now at a new all-time high. Here I want to analyze whether its a good time to sell some of the best performing S&P 500 (INDEXSP:.INX) index members. All the three companies that I am about to review operate either in the consumer discretionary space or in the information technology sector. Since the year started, cyclicals have dominated their defensive counterparts. Out of the 30 best gainers, only three stocks belonged to defensive sectors. Let’s see if you should buy, sell or hold these top performers.

Huge June out-performance

Of course, the Madison Square Garden’s spin-off,  higher dividends (the yield stands at 3.15%) and more share-repurchases have also helped the stock performance but the main reason behind the share’s recent out-performance has been related to takeover rumors. Selling for 2013 9.1 times EV/EBITDA, I think the price of the shares already reflect the company’s value, hence, I would sell Cablevision at the current market price. After all, the cable operator still suffers from high indebtedness (its debt is at around $10 billion) and slow growth.

Optimism imbedded into current market prices

First quarter results were proof that the stock deserved to recover. During the last quarter, cash generation was strong and the company generated $5 billion of free cash flow (FCF) in the first half of its financial year 2013.