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 65,000 stock gurus (and counting) have to say about them?

Stock

One Year Ago Today

Currently Fetching

CAPS Rating

BE Aerospace  (NASDAQ:BEAV)

$22.26

$45.39

*****

Autodesk (NASDAQ:ADSK)

$35.10

$50.50

****

Oracle (NASDAQ:ORCL)

$18.19

$22.18

****

Research In Motion (NASDAQ:RIMM)

$36.26

$116.37

**

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.

Everybody loves a winner
When stocks soar on the wings of success, bears become rare. So it comes as no surprise that nearly three of the four stocks on today's list earn above-average ratings from investors. What is surprising is the one stock that doesn't: Research In Motion. Why are investors down on the company behind the "CrackBerry" -- a product so good, so ubiquitous, and so popular that it's purported to possess the addictive qualities of cocaine?

That's the question we'll examine today.

The bear case against Research In Motion
For the investors who don't yet know Research In Motion, NetscribeTech gives us a brief introduction:

[Research In Motion] is a name widely known for its ... BlackBerry platform. A leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market, RIM boasts of agreements with more than 75 carriers spread across 30 countries.

... [The] company has staked out a dominant position in the PDA market, leveraging the popularity of wireless email. Going forward, as the market slows down, the company [will derive] fewer opportunities. In addition, the market has become more competitive, and bigger competitors, such as [Nokia (NYSE: NOK  ) , Motorola (NYSE: MOT  ) , and Apple (Nasdaq: AAPL  ) ], have gained meaningful shares in the smartphone market, eying the lucrative foothold in wireless data. ... [It could] be a big challenge for RIM to achieve the same success it has achieved lately in the enterprise market.

The bear case against Research In Motion basically boils down to three words: "Fear the iPhone." Reviewing the top-rated CAPS players' bearish pronouncements on the company, we find three All-Star investors in full agreement on RIM's biggest threat:

  • Steve819 warns: "Finally, with the release of the iPhone, [these] guys lose bragging rights for the coolest phone among the digital elite."
  • chk999 argues: "iPhone sales are cutting into the BlackBerry market. That combined with a P/E ratio of 63 says this will underperform." Since chk999 penned those words, RIM's stock price has rocketed to 91 times earnings. Make of that what you will.
  • Writing from north of the border, EV38 advises that the same thing is happening in Canada, where "AAPL's iPhone ... is causing a great stir in our industry as something that could finally eliminate RIMM's virtual monopoly. The marketers will push this thing like crazy until RIMM prices their products more fairly, and they will see their profits decline greatly from there."

Time to chime in
Yet just last week, Research In Motion reported earnings that appear to give the lie to the sentiments expressed above. Sales rose more than 100%, as did profits. Moderate stock dilution still left per-share earnings with a clean double. That leaves us with a dilemma today, folks: Are we to believe the fears of some of the world's best investors, or should we follow the numbers staring us in the face? Is RIM a scary "sell," or a blockbuster "buy"? You tell me.


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