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, tens of 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. The ratings usually 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 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. Thanks to Motley Fool CAPS, 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 70,000 stock gurus have to say about them?

One Year Ago Today

Currently Fetching

CAPS Rating

Chesapeake Energy  (NYSE:CHK)

$32.15

$38.81

*****

Activision  (NASDAQ:ATVI)

$15.31

$23.67

*****

Arcelor Mittal  (NYSE:MT)

$41.96

$81.57

*****

SINA Corp (NASDAQ:SINA)

$26.25

$56.56

****

Yum! Brands  (NYSE:YUM)

$29.00

$39.13

****

General Dynamics (NYSE:GD)

$69.94

$91.23

****

Mercury Computer (NASDAQ:MRCY)

$12.41

$15.36

*

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. 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 every stock on today's list earns an above-average rating from investors. What is surprising is the one stock that gets panned: specialized computer systems maker Mercury Computer. The company's stock exploded higher in the wake of a first-quarter earnings report Wednesday that showed the company outperforming expectations on revenue and raising earnings guidance for the rest of this year. Mercury's news and views helped lift the stock 41% in two days.

That's hardly the kind of news you'd ordinarily expect out of a one-star stock. And indeed, when you look more closely, Mercury isn't quite so hated as its one-star rating might lead you to think. In fact, those who've reviewed the company are evenly split between bullish and bearish calls. Only one CAPS player penned a pitch against Mercury. Let me flesh it out.

Mercury Computer may have "beat estimates" Wednesday, but the company still lost money, and promised to keep on losing money all year long, ending this fiscal year with a $0.54-per-share GAAP loss. It's not expected to turn profitable before fiscal 2009.

Time to chime in
See how simple it is to write a CAPS pitch? And here's a nudge for Mercury bulls itching to get in the game: To find a silver lining behind Mercury's GAAP cloud, you need look no further than the cash flow statement, which shows the firm generating $3.2 million in free cash flow last quarter, a remarkable turnaround from the previous year's $8 million cash bonfire. source=icaedilnk9950002

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


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Related Tickers

11/26/2014 4:02 PM
CHK $23.04 Down -0.66 +0.00%
Chesapeake Energy CAPS Rating: ****
GD $144.53 Down -0.07 +0.00%
General Dynamics CAPS Rating: ***
MRCY $13.15 Down -0.13 +0.00%
Mercury Computer S… CAPS Rating: *
MT $12.49 Down -0.04 +0.00%
ArcelorMittal CAPS Rating: ****
SINA $38.20 Down -0.07 +0.00%
Sina CAPS Rating: ****
YUM $76.75 Up +0.46 +0.00%
Yum! Brands CAPS Rating: ****

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