Get Ready for the Fall

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"The bigger they are, the harder they fall." It's the worst nightmare of every investor in today's market -- buying a hot stock just before it takes a nosedive.

Every day, Nasdaq.com publishes a list of stocks whose shares have just hit new 52-week highs. And every day, investors read the list and tremble -- some with greed, others with terror. On our Motley Fool CAPS investing community, these top stocks usually enjoy favorable ratings, since everyone loves a winner. But what should you do when some of CAPS' smartest investors pan one of these hot stocks?

For starters, consider using the "52 week high" list as a starting point for further research. Stocks can rise for many reasons, but a little help from Motley Fool CAPS can make it easier to figure out how worthy those reasons are. Let's see what the more than 85,000 stock gurus (and counting) in CAPS have to say about the list's latest contenders:

	One Year Ago Today	Currently Fetching	CAPS Rating (5 max):
Patterson-UTI Energy  (Nasdaq: PTEN)	$22.96	$27.69	*****
Apache Corp.  (NYSE: APA)	$72.09	$126.41	*****
Southwestern Energy  (NYSE: SWN)	$20.85*	$36.38	*****
Atlas America  (Nasdaq: ATLS)	$38.28*	$64.57	*****
Steel Dynamics  (Nasdaq: STLD)	$21.88*	$35.93	*****

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. *Split adjusted.

Everybody loves a winner
When stocks soar on the wings of success, bears become rare. So it should come as no surprise that the five stocks above earn five stars apiece as investors applaud their success in hitting 52-week highs.

Bears in hibernation
With every stock on today's list maxing out its CAPS rating, there's simply not enough negative sentiment here for me to tag any of these companies as "ready to fall." That said, a few brave souls venture underperform ratings on these stocks. Let's survey some of their more bearish comments:

Patterson-UTI: handoverhill has a few worries here:

At the end of December 2007, Patterson-Uti Energy, Inc.'s revenues decreased 17% to $2.11B and it's net income before accounting changed decreased 35% to $438.6M. Sales from the contract drilling and drilling & completion fluids segments was down. ... Since this stock has been on the uptrend is ready to take a down trend.

Apache: CAPS All-Star ResearchLover defies what's lately become accepted Wisdom, declaring, "Great company, love that they recover from waning oil fields, adding value. But I think (unfortunately) peak oil isn't here yet and the market will realize this in short order."

Southwestern Energy: Echoing ResearchLover's sentiments, copper1815 argues that:

... stocks involved in marginal energy plays at a time when the risk of a downhill path in energy is more likely than not are a bad idea. This stock has ... used some questionable third party impact studies to reach a 52 week high. The chips are going to come due in a few short years.

(Then again, copper1815 made this argument a year ago, and the stock has roughly doubled since.)

Atlas America: ReInAd has the distinction of being the only CAPS All-Star to rate Atlas America an "underperformer." That's been a losing bet so far, but it's hard to argue with the numbers: "Atlas is trading at a price-to-earnings ratio approaching 90, in an industry where the average is 15. The stock is also selling at 4 times book value."

Steel Dynamics: n50 predicts that a "slow U.S. economy will result in global slowdown of infrastructure/auto/etc."

Of course, if that last argument proves to be true, more stocks than just Steel Dynamics will be adversely affected. If you think you can make a more convincing argument for or against these stocks -- here's your chance. Sign up for Motley Fool CAPS today -- it's 100% free.