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 97,000 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):
Union Pacific  (NYSE: UNP)	$117.21	$138.08	*****
Burlington  Northern Santa Fe  (NYSE: BNI)	$94.07	$99.77	*****
Halliburton (NYSE: HAL)	$31.65	$47.43	*****
Nabors Industries  (NYSE: NBR)	$31.77	$37.72	*****
VisionChina Media  (Nasdaq: VISN)	$8.00*	$15.85	**

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. *Since IPO.

Everybody loves a winner
When stocks soar on the wings of success, bears become rare. This week, it appears there's not a specimen of ursus arctos to be found anywhere in the oil patch. Nor will you find an ursus americanus strolling the train tracks with a hobo sack tied to a walking stick. No, Fools, CAPS players reserve their antipathy for one stock and one stock only: mobile digital television advertiser VisionChina Media. Let's find out why.

Build-a-bear, anyone?
Over on CAPS, just 66 souls have rated VisionChina, 13 of them unfavorably. However, only two of these bears have chimed in with pitches explaining their positions. Regarding these pitches, I've got good news and bad news for you. Which do you want first?

Good news first, huh? Well, when it comes to people you want to hear from about stock picks, there are few in all of CAPS Land more esteemed than Messrs. tenmiles and chk999. Each of these worthies occupies the rarefied top one-tenth-of-one-percent rank among investors on CAPS.

And now for the bad news: tenmiles and chk999 have let us down on VisionChina:

• Says the latter: "The meltdown in coming." Uh-huh. But why?
• Meanwhile tenmiles soothsays: "Expect this transit advertiser to be 'bus ted' before year end-target $10." Clever, ten. But I repeat the question: Why?

Sadly, it appears investors are still on their own in discerning VisionChina's flaws. But what the heck -- I'll take a stab at picking a few nits. Beginning with valuation, VisionChina stock sells for 36 times its annual sales. Astounding! I mean, compare VisionChina's valuation to that of local rival Focus Media (Nasdaq: FMCN). Focus Media boasts profit margins nearly as great as VisionChina's, but a P/S ratio around 8. For an even more dramatic comparison, check out how these firms compare to uberadvertiser Google (Nasdaq: GOOG) and its 10 P/S ratio. The world champion of Internet advertising's valuation looks a whole lot more like Focus Media's than it does VisionChina's.

Moreover, if you loved VisionMedia's profit margins, you're going to ... hate its cash profits. The company may have reported $9.4 million in net income last year, but it appears management turns a blind eye to actual cash profits. Free cash flow for the same period came to negative $10.3 million.

Time to chime in
Are these reasons enough for VisionMedia to give up its hard-won gains, to turn and tumble back to earth? Personally, I think yes, but who cares what I think? Now's the time for you to make your voice heard. Click on over to Motley Fool CAPS and tell us what you think.

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