"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 30,000 rated stock gurus (and counting) have to say about them?
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Stock
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One Year Ago Today
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Currently Fetching
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CAPS Rating
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NVIDIA (NASDAQ:NVDA)
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$20.31
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$43.16
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****
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Valmont Industries (:VMI)
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$43.81
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$73.94
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****
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Chordiant Software (NASDAQ:CHRD)
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$8.15
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$15.55
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****
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Sohu.com (NASDAQ:SOHU)
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$26.06
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$28.98
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***
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Cypress Semiconductor (NYSE:CY)
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$13.90
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$23.84
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***
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SunPower (NASDAQ:SPWR)
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$28.02
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$64.61
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**
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First Solar (NASDAQ:FSLR)
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*
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$87.00
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**
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Five stars = highest possible CAPS rating; one star = lowest. Companies are selected from the "NASDAQ 52 Week High" list published on Nasdaq.com on the Saturday following close of trading last week. One year ago and current pricing provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.
*First Solar made its debut on the Nasdaq on Nov. 16, 2006.
Everybody loves a winner
When stocks soar on the wings of success, bears become rare. So it's no surprise that investors give average or better marks to most of the stocks on today's list. But in a first for this column, we've got a tie at the bottom between two nearly identical firms -- two red-hot solar plays. Bowing to investor sentiment, I'm not going to pick just one of these firms to, well, pick on today -- I'm going to profile them both.
The bear cases on SunPower and First Solar
- Writing in regard to First Solar last month, All-Star investor GunnarVagotis warned: "Solar power may be a wave of the future -- I hope so -- but that doesn't justify the kind of speculation that pushes earnings ratios into the 200s." For the record, First Solar now sports a trailing P/E ratio of nearly twice that princely valuation ... and SunPower is rapidly approaching it.
- Other All-Stars describe the two firms' P/E ratios with adjectives running from "enormous" to "gross."
- The No. 1 CAPS player of all time, TMFEldrehad, opines: "I think the market has underestimated the infrastructure challenges facing alternative energy companies, leading to overvaluation across the board in this sector."
Time to chime in
So in a nutshell, everybody likes the idea of solar power in theory. However, some of our very best investors worry that the valuations being accorded these two stocks, SunPower and First Solar, are flying at an Icarus-like proximity to the sun. Are they right, or are they worrywarts who just don't get it? Tell us what you think on CAPS -- and don't forget to explain just what "it" is.
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. 1,865 out of more than 31,000 rated investors. The Fool has a disclosure policy.
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