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?

Everybody loves a winner
When stocks soar on the wings of success, bears usually become rare. Which makes it all the more surprising that no stocks on this week's list enjoy above-average support in CAPS-land. Meanwhile, investors are panning two of the most successful investments of the past year: natural gas utility KeySpan and mobile phone operator United States Cellular (USC).

Actually, though, on closer examination, it's only USC getting roundly panned. KeySpan actually gets twice as many outperform ratings as underperforms from our community of investors. At USC, in contrast, the ratio is reversed -- half a dozen players expect it to outperform the market, while a full dozen say the opposite. Let's find out why.

The bear case on United States Cellular

• CAPS All-Star PopsDaniecki seems to think that USC's success is an entirely stock-related phenomenon, depending on an upwards-marching market for its momentum. Says he: "While these folks are riding a recent surge, I don't feel like it is sustainable in the coming recession."
• As for the business behind the stock, xdogg opines that USC faces: "Wayyyy too much competition, with no competitive advantage."

I know, I know. As bear theses go, these are a bit skimpy on the details. Let me see if I can flesh out the anti-USC position a bit for you. First off, we've got the surface-level valuation -- the P/E. Selling for 35 times trailing earnings, and expected by the half-dozen analysts who follow it to grow profits at just 13.4% per year long-term, USC looks seriously overvalued to this Fool. Nor does free cash flow save the day. At $213 million for the last 12 months, free cash flow almost exactly mimics net earnings at USC, yielding a price-to-free cash flow ratio of 35 as well.

And then there's the competition. USC competes with the giants of the industry -- the mobile arms of AT&T (NYSE:T) and Verizon (NYSE:VZ). Each 10 times USC's size by revenues. Each owned by a parent company boasting operating margins twice as good as USC can generate, with stocks that sell for nearly half the valuation that USC's commands.

See how easy that was?
Writing a pitch on CAPS is the easy part, of course. Figuring out which way the wind is blowing, and whether a stock will outperform the market in the first place -- that's the tricky part. Me, I happen to think USC is an overpriced company, and outmatched by the competition. But even a substandard stock can turn on a dime if someone decides to take it private at a premium. I suspect that has a lot to do with why the stock has done so well of late.

But the point of this column isn't to tell you what I think. It's to invite you to contribute your own knowledge to the Foolish collective. If you know USC, then drop by CAPS some time and tell us what you think of the company and its chances. Make a convincing enough argument either way, bear or bull, and I can pretty much guarantee you that you'll end up featured as one of the top pitchers on this sparsely covered stock.

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 350 out of nearly 30,000 rated players. The Fool has a disclosure policy.