5 Stocks That Just Won't Quit

In my weekly Fool column "Get Ready for the Fall," I run Nasdaq.com's 52-week highs list through the "wisdom of crowds" meter we call Motley Fool CAPS. The result: a list of stocks that have flown so high, investors are starting to get nervous about that whole "gravity" thing. But while many stocks will indeed plunge back to Earth, some seem immune to gravity, steadily riding a rising megatrend to ever-greater heights.

Today, we'll move beyond stocks that have hit 52-week highs, and identify companies now surpassing five solid years of outperformance. Which of these will thrash the market averages for another half-decade? Here are this week's leading contenders:

Companies

Recent Price

CAPS Rating
(out of 5)

Bull Factor

National Health Investors  (NYSE: NHI  )

$36.26

*****

93%

Atrion

$149.42

****

96%

Western Digital  (NYSE: WDC  )

$43.22

****

94%

Dr. Reddy's Laboratories (NYSE: RDY  )

$26.13

****

95%

Oracle (Nasdaq: ORCL  )

$24.43

****

93%

Companies are selected from the "New 5-Year Highs" list published on MSN Money on Monday. CAPS ratings from Motley Fool CAPS.

Each of the five stocks named above hit a five-year high last week, but if you ask the 145,000 (and counting) investors on Motley Fool CAPS, they're just getting started. Topping the list this week is a little-known REIT by the name of "National Health Investors," which runs an hundred-odd -- you guessed it -- health-care properties, primarily long-term care facilities.

Sound like a good play on an aging America? Let's find out.

The bull case for National Health Investors
EasyCo spotlighted National Health Investors way back in January of '08, arguing: "It's all about the aging population."

SNEAKO got even more specific a couple months later: "Two words ... BABY BOOMERS!"

And in December 2008, CAPS All-Star havoc315 clambered aboard the wagon, arguing: "The dividend and solid balance sheet makes it a strong investment." (So far, so good. This investor is up 82% in little over a year.)

But is it too late to catch this train? After all, National Health Investors sells for a 17 P/E versus growth rates that Wall Street doesn't expect to break 6% annually over the next five years. That hardly sounds like a bargain ...

And yet, if you compare National Health Investors to other companies in the REIT-space, it just might be  -- a bargain, that is.

Company

Trailing P/E Ratio

5-Year Projected Growth Rate

Dividend Yield

NHI

16.8

5.5%

6.1%

Simon Property Group (NYSE: SPG  )

60.1

negative

3%

Boston Properties (NYSE: BXP  )

88.4

1.7%

2.9%

Annaly Capital (NYSE: NLY  )

14.6

3.2%

16.1%

Relative to what investors have been paying to own the competition, therefore, National Health Investors actually looks pretty good. Its P/E ratio is but a fraction of what other stocks will set you back. Its growth rate, while small in absolute terms, makes it look like a speedster -- relative to the competition. And the firm's 6.1% dividend yield, among this group, is second only to Annaly -- which carries considerably more risk inasmuch as its balance sheet is loaded up with more than $56 billion in debt, versus National Health's virtually debt-free, cash-rich accounting books.

Time to chime in
If it's dividends you seek, at a relatively safe valuation, I think you could do a lot worse than placing a small bet on National Health Investors. But the purpose of this column is not to tell you what I think -- or even what the few CAPS members profiled above are saying about NHI. In fact, only a relative handful of Fools have chimed in on this stock so far, just 110 souls.

So what we'd really like to do is gather more opinions on the stock, and find out if it really is as good as it seems. That's where you come in. Click on over to Motley Fool CAPS right now, and tell us what you think about National Health Investors. Inquiring minds want to know.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

The Fool owns shares of Oracle and has an options position on the stock.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 916 out of more than 145,000 members. The Motley Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (14)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 31, 2009, at 2:37 PM, retireddelfool wrote:

    NLY has grown it's dividend this year from $.50 to $.75,not a bad move.

    Get it while you can......

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