Community Health Systems (CYH), Alcatel Lucent SA (ADR) (ALU): Shorts Are Piling Into These Stocks. Should You Be Worried?

I figured Alcatel Lucent SA (ADR) (NYSE:ALU) was a unique value in the low $1 range. Above $3, though, there are still plenty of questions left to be answered. For one, when is Alcatel-Lucent going to return to profitability? Aside from a rare annual profit in 2011, it hasn’t regularly turned in quarterly profits since 2005, which is also the last year it produced positive free cash flow. Another pending question is: When will Alcatel-Lucent stop writing down assets? In its second-quarter results, the company took a 552 million euro impairment charge on assets and another 194 million euro charge on restructuring charges. It seems like every time you turn around these days, it’s another writedown.

Instead of pumping Alcatel Lucent SA (ADR) (NYSE:ALU) any higher, may I suggest trading it out for Cisco Systems, Inc. (NASDAQ:CSCO) ? Cisco’s products are synonymous with cloud computing and big data center storage, and they’re bound to come in handy as wireless service providers push toward universal 4G LTE acceptance. With steady cash flow and profitability, it appears to be a considerably more attractive choice than Alcatel-Lucent, which I would leave to short sellers here.

Foolish roundup
It doesn’t happen all too often, but this week’s theme is leave it to the short sellers. All three companies appear to be biting off more than they can chew with their current valuations — Weight Watchers with its poor brand loyalty, Community Health Systems (NYSE:CYH) with its high debt levels, and Alcatel Lucent SA (ADR) (NYSE:ALU) with its ongoing losses and writedowns.

The article Shorts Are Piling Into These Stocks. Should You Be Worried? originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Weight Watchers International (NYSE:WTW) and recommends Cisco Systems. 

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