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 rocket stock just before it takes a nosedive.

Every day, WSJ.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 not always...

Stock	52-Week Low	Recent Price	CAPS Rating (out of 5)
Compania Cervecerias Unidas  (NYSE: CCU)	$22.54	$36.75	*****
SYNNEX Corp	$8.63	$28.80	***
SciClone Pharma (Nasdaq: SCLN)	$0.63	$2.85	***
Merge Health care (Nasdaq: MRGE)	$0.26	$4.50	**
Labopharm (Nasdaq: DDSS)	$0.32	$2.48	**

Companies are selected from the "New Highs & Lows" lists published on WSJ.com on Friday last week. 52-week low and recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Knives and knaves
Just what is it that Fools have against health care? Up above you see a list of five stocks. Five stellar performers (stock-price-wise, at least). Five stocks that, by all rights, investors should be cheering. But they're not.

Not all of 'em, at least. Three of the five that work in the medical field -- SciClone, Merge, and Labopharm -- all receive halfhearted ratings from CAPS investors. SYNNEX gets a shrug despite having no ties to the field. Turns out, there's only one stock on the list that Fools seem to think having anything going for it ...

And that's the one I hate most of all.

The bull case for Compania Cerveceries Unidas
Before I tell you why, though, let's let the bulls have their say.

vintagedrop introduced us to CCU in March as "Basically a monopoly in Chile with Beer assets, growing fast in Argentina. Recession or not people still drink!" And as CAPS All-Star PrincetonAl pointed out last year, CCU actually gives them some cash to pay for their drinks. Agreeing that CCU is a "Dominant player in Chile," PrincetonAl also likes the fact that the stock pays "a great yield."

But can it afford to? "Basically a monopoly" or no, CCU's profit margins don't measure up to its rival to the north, AmBev (NYSE: ABV). At 10%, give or take, they also lag both local rival Embotelladora Andina (NYSE: AKO-A) and far northern brewer Molson Coors (NYSE: TAP).

But you wouldn't know it from CCU's stock price. From a P/E perspective, the stock looks pretty pricey at nearly 15 times earnings – despite the fact growth is expected to slow to just 5% over the next five years. Even worse, CCU's cash profits fall far short of what this company reports under GAAP. As a result, CCU sports a triple-digit P/FCF ratio of 180.

Time to chime in
Personally, I see absolutely no redeeming virtues in CCU. The price looks too high at first glance, and second and third as well. Expected "monopolist" benefits in the form of high profit margins are absent.

But hey, feel free to disagree.