By David Sterman

NEW YORK ( TheStreet) -- Stocks fell from a six-month high, putting a pause in the 13% rally that started at the end of August. Investors may have found that many stocks are overvalued, putting them most at risk if the market keeps falling.

I ran a screen for stocks that have risen at least 40% in the past three months and sport 2011 price-to-earnings ratios above 40. Some of the slow-growth companies, in particular, don't merit such a strong move.

The logical rebounders: Some of these stocks are here simply because they were too undervalued earlier in the summer. In July, I suggested that Amazon.com ( AMZN), trading at $120, was due for a rally and predicted that "as investors start to once again embrace the company's robust long-term outlook, shares should eventually power past the $150 mark seen earlier this spring" (Read Long-term Gains Will Come from this Tech Giant's Short-term Pain.) With the stock now at $170, it's hard to find any appeal, as it now trades for 47 times next year's profits.

In a similar vein, health-care-information vendor Athenahealth ( ATHN) also looked like the victim of too much pessimism in the summer.

Now with a much loftier P/E multiple, which is nearly twice next year's sales-growth forecast, it looks like too much optimism is the name of the game.

When the market gets carried away: I am among thousands of happy Netflix ( NFLX) customers. The video delivery and streaming service continues to attract new subscribers at a stunning pace, and that's pushed its stock into the stratosphere, trading at more than 40 times projected 2011 profits. But I've seen this picture before.

In 1999, Wal-Mart ( WMT) had a very rich multiple, as investors assumed strong growth would continue forever. But growth started to decelerate, and the shares slowly lost that P/E premium. A decade later, shares of Wal-Mart have gone nowhere, and still-rising sales were met with an ever-shrinking P/E. I fear a similar fate will befall Netflix.

Netflix is a company that can't afford to stumble. One so-so quarter, and this stock is toast, as expectations are so high. If you own shares of Netflix, it may be time to part with a stock that has been a real winner.

Travelzoo's ( TZOO) growth spurt: This online travel site has surely posted impressive recent results. Profits for the September quarter were double the consensus forecast, as the company saw a 17% jump in revenue. Results were depressed in 2009, but demand for travel is clearly on the mend. Yet investors are clearly getting carried away, assuming the company can grow at a very fast pace in the next few years. After all, the online-travel market is largely mature, with formidable competition coming from the likes of Priceline.com ( PCLN) and Expedia ( EXPE).

Travelzoo's sales are likely to rise around 20% this year and 10% next -- logical assumptions in light of the 10% annualized growth posted in 2007, 2008 and 2009. So why do shares trade at 40 times next year's projected profits? Because investors are still reacting to recent strong results, and momentum investors smell a winning trade.

I'd hate to be around when the momentum investors take profits. We may already be there. Shares surged strongly last week but have now stalled.

Room to run? Not all of these strong gainers look ripe for profit-taking. For example, micro-cap Cleveland BioLabs ( CBLI), which has doubled in the past three months, could rise much higher if it sees strong demand for its anti-radiation treatment. The U.S. government may eventually look to stockpile the company's drug to treat to the effects of a potential nuclear attack, such as with a dirty bomb. As with any small biotech, this stock remains speculative, and investors should do lots of homework before jumping in.

In a similar vein, Depomed ( DEPO) is another promising biotech play that could easily trend much higher -- if all goes according to plan. The company's oral drug-delivery platform has brought interest from a number of major drug companies that aim to license the technology. Depomed already uses that technology in its drugs that treat diabetes and urinary tract infection, and is also testing other drugs that have large potential market sizes. The company's potential licensees are hoping to secure FDA approval in the next few quarters. Yet, I repeat, this remains speculative, and investors should do lots of homework before jumping in.

Action to Take: A strong run for a stock isn't always a reason to sell. Back in the 1990s, Cisco Systems ( CSCO), Dell ( DELL) and Wal-Mart routinely occupied the annual best-performing lists, year after year. But it's hard to find any stocks in this group that are on the cusp of a robust long-term rise in sales, with the possible exception of the biotechs.

This article originally appeared on StreetAuthority. To read more articles from David Sterman on StreetAuthority, you can visit this link.

Disclosure: At the time of publication, David Sterman owned no positions in the stocks mentioned.

This article originally appeared on StreetAuthority, founded in 2001 by industry veterans Lou Betancourt and Paul Tracy. StreetAuthority is a financial research and publishing company with offices in Austin, Texas and Gaithersburg, Maryland. The company aims to help individual investors earn above-average profits by providing a source of independent and unbiased investing ideas.

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