5 Stocks That Just Won't Quit

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In my weekly Fool column "Get Ready for the Fall," I run Nasdaq.com's 52-week highs list through the "wisdom of crowds" meter we call Motley Fool CAPS. The result: a list of stocks that have flown so high, investors are starting to get nervous about that whole "gravity" thing. But while many stocks will indeed plunge back to Earth, some seem immune to gravity, steadily riding a rising megatrend to ever-greater heights.

Today, we'll move beyond stocks that have hit 52-week highs, and identify companies now surpassing five solid years of outperformance. Which of these will thrash the market averages for another half-decade? Here are this week's leading contenders:

	Recent Price	CAPS Rating (5 max):	Bull Factor
Hawkins (Nasdaq: HWKN)	$17.30	*****	95%
General Mills  (NYSE: GIS)	$68.82	****	91%
Wal-Mart Stores (NYSE: WMT)	$63.17	***	86%
Northern Trust  (Nasdaq: NTRS)	$87.20	***	84%
Hawaiian Holdings (NYSE: HA)	$10.45	*	63%

Companies are selected from the "New 5-Year Highs" lists published on MSN Money on Thursday/Friday. CAPS ratings from Motley Fool CAPS.

Everybody loves a winner
Well, maybe not everybody. In fact, of the five stocks hitting five-year highs on today's list, only two enjoy above-average ratings from CAPS members. As for those two ... well, in a contest between household pantry fave General Mills and, um, Hawkins, who do you think would enjoy the greatest support from investors? Odds are, you wouldn't bet on the company you've never heard of -- and yet, Hawkins is it.

Let's find out why this manufacturer of bulk and specialty chemicals (of all things) is now the hottest stock on Wall Street.

The bull case for Hawkins 

• Almost a year ago, the Fool's own TMFMattyA places Hawkins: "In the tradition of [Neogen, Oil-Dri Corp of America, and Utah Medical]... a small, Midwestern chemicals company with a growing portfolio of niche products; nice free cash flow; strong balance sheet with zero debt; an insider team with familial connections to the business and an over 20 percent ownership stake; and a record of modest, but consistent year-over-year growth. ... Oh, and did I mention the nice dividend ... that they've paid every year for the past 23 years?" (That dividend, by the way, is as nice today as when TMFMattyA penned this pitch -- currently yielding 3.2%.)
• VolatilityChap agrees, calling Hawkins a "sleeper" with "Beautiful fundamentals, nice cash flow, GREAT management."
• Finally, as CAPS All-Star kristm mentioned a year ago last July: "the market for water treatment chemicals isn't exactly going away."

Indeed it isn't -- or at least, I hope it isn't. As hard as Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP) are working to get us to turn off the tap and pay for their water, I have to hope that our water utilities continue efforts to kill any buggies in the "free" water coming out of our taps. And for that, they need the kinds of chemicals that Hawkins supplies.

That said, while the need for water treatment is clear, I find the investment thesis for Hawkins rather murky. Sure, the stock's P/E of 16 doesn't look particularly unreasonable as a stand-alone number. But it's hard to put that price in context when no analysts have posited a growth rate for Hawkins. All I can really say about the firm's long-term prospects is that, if they're anything like its historical performance, I'm not impressed.

You see, over the past five years, Hawkins has grown its revenues at the impressive rate of 15%. But over the same time period, the firm's profits have barely eked out 5% compounded growth. So if Hawkins' long-term future looks anything like its long-term past, we could be staring at a company with a frighteningly high PEG ratio of 3.0 or more here, folks -- not at all a pleasant prospect. Add to this the fact that Hawkins' net earnings under GAAP overstate its true free cash flow by more than twice, and I have to say: I'm feeling rather bearish on Hawkins today.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Hawkins -- or even what other CAPS members are saying. We really want to hear your thoughts. Click on over to Motley Fool CAPS and tell us what you think.

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