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 76,000 stock gurus (and counting) have to say about them?

Everybody loves a winner
The old saying holds true again today. None of our five companies, newly arrived on the 52-week-high list, gets rated as an underperformer on CAPS. To the contrary, our community of lay and professional investors thinks these stocks -- already at their highs for the year -- are well-positioned to keep on outperforming the S&P 500.

Build-a-bear, anyone?
With optimism prevailing this week, I'm hesitant to suggest that any stock on today's list looks "ready for the fall." But we can highlight a few negative sentiments that could -- if they play out -- foretell a fall. Surveying our top three stocks on today's list, let's look at a sample of the best bear theses for each:

• VimpelCom: "Best" here is a relative term. No one's yet put together a cogent CAPS pitch against VimpelCom (if you'd like to be the first, click here and start typing), but in the meantime, we have CAPS newcomer texgeorgio, who informs us: "Vimpel is owned by the Alpha Group in Russia [which] is owned by billionare Mikhail Fridman ... a secretive Russian billionaire who is a key figure in Russia's dangerous policy of selling nuclear technology to the Islamic Republic of Iran. ... The lack of accounting standards and the general knowledge of 'shady' dealings in Russia has me believing the run-up in this stock is not based on truth -- but on lies. I see this stock losing 1/2 its value in the next two years."
• Costco: CAPS All-Star leohaas writes in his blog that "because of the credit crunch, declining home values, and the rising fuel and food cost, people have less money to spend on things that aren't necessities. And that will hurt everyone in the retail industry during their peak season: Xmas. ... with less money available and more of it going to pay for necessities, frivolous spending on items like Holiday presents will be down. All retailers will take a hit. P.S. I have included discounters like [Wal-Mart (NYSE:WMT)] and COST in this call. One can make an argument that the discounters may actually take advantage of the financial problems of the consumer: people will be looking for cheap stuff."
• Western Digital: u4aora gives Western Digital credit for being "able to position very successfully" and being "very cost oriented which helps in [today's] market." But on the downside, u4aora criticizes Western Digital for skimping on its research-and-development budget.

On Western Digital, I have to say that I agree with u4aora on a number of points. Although this post is nine months old, a quick review of the company's financials shows that it could just as easily have been written yesterday. With sales up 33% on average over the last couple quarters, R&D spending has grown just 16%. 

Underinvesting on research seems unwise in a tech firm -- but at the same time, I can't help noting that the same thing is happening at rival hard-drive maker Seagate (NYSE:STX), where R&D growth is in the single digits (and sales growth is half what Western Digital has achieved).

To reiterate: On balance, CAPS investors are confident that each of these three stocks will beat the market over the long term. But if the majority is proved wrong, remember the Foolish words of the minority quoted above. They'll be the ones whispering, "We told you so."