Get Ready for the Fall

"The bigger they are, the harder they fall." This old saying sums up the worst nightmare of every homeowner, every gold buyer, and every investor in today's market. Dare ye buy at the top?

Every day, Nasdaq.com publishes a list of the market's top stocks -- the companies whose shares have just hit their highest intraday price of any time in the past 52 weeks. Every day, investors read this list and tremble -- some with greed (big mo', baby!), and others in pure, unmitigated, acrophobic terror (whatever you do, don't look down).

Over on Motley Fool CAPS, thousands of investors just like you are watching these same companies and voting their gut on whether they'll keep rising or stumble and fall. Usually, the ratings wax optimistic as stocks hit new highs -- because everyone loves a winner. But what do you make of it when some of the smartest investors out there are panning a hot stock?

You could heed them. You could ignore them. You could take the stock tickers and construct anagrams from 'em. For my money, though, the best course of action is to use the "52-week high" list as just a starting point for further research. After all, stocks can go up for many reasons, and it's up to you to decide how worthy those reasons are. But thanks to Motley Fool CAPS, now you don't have to make the decision alone.

With that said, let's meet today's list of contenders, drawn from the latest "52-week high" list at Nasdaq.com. What does our panel of more than 29,000 stock gurus (and counting) have to say about them?

Indecision on Main Street
They say everybody loves a winner, but today's list begs to differ. We're split right down the middle here, with three companies rated better than average, three less, and one just. But that's OK. In this column, we're looking not for winners that will keep on winning, but for stocks that may have gotten a bit ahead of themselves and are at risk of taking a tumble. With three such candidates to choose from, let's examine the most obvious target of investor doubt: RadioShack.

The bear case on RadioShack
Out of 336 investors polled, just 46% rate RadioShack a likely outperformer -- and the better the investor, the worse the sentiment. Our CAPS All-Stars give the stock just a 39% approval rating. They explain as follows:

•  Says kristm: "The ideal situation for RSH would be to focus on the needs of hobbyists and computer techs-electronic bits and parts, cables, wires, smaller computer parts-the stuff too obscure to find at Wal-Mart, Office Depot, or Best Buy. Like a Fastenall for the high tech set. But instead they focus on cheap toys and cell phones you can get anywhere, push their own inferior brand of products, and keep taking space AWAY from the tech bits."

•  muirmm agrees: "The world has changed; the do-it-yourselfers who once bought large quantities of small items are disappearing. As the president of Heathkit said when they threw in the towel (twenty years ago!) 'We looked at our demographics. Every year our average customer became one year older.' With its former customer base disappearing or gone, Radio Shack needs a new one. Trying to go up against Circuit City and Best Buy in consumer electronics would be suicide."

•  But if Radio Shack is doomed, why is the stock hitting new highs? GoodOmens explains: "Investors are currently rallying behind the new CEO Julian Day who in the past has helped improve operations at Sears and Kmart. While this is good, the [current] price is way to expensive for what Rat shack is currently able to produce. For instance: The company hasn't been able to significantly improve revenue over the past decade and sales last year fell almost 6%. For those that love P/E rations: it's currently at 24 while Best Buy is at 16! Everything screams that this stock is way to expensive as it sits currently."

Time to chime in
Predicting that Radio Shack will fail seems an easy call to make. Suspiciously easy. And yet, it's hard to argue with the people making the call -- these are some of the very best investors we're polling, Fools who've racked up CAPS ratings better than 90% of their peers. Do you know something they don't? Then come on over to CAPS to tell us why you're right and Wall Street -- and our CAPS All-Stars -- are wrong.

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

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. 1,493 out of more than 29,000 raters. The Fool has a disclosure policy.