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)
Cintas (Nasdaq: CTAS)	$18.09	$30.06	****
PG&E (NYSE: PCG)	$26.67	$40.93	****
Banco Santander-Chile  (NYSE: SAN)	$25.18	$56.55	**
Perot Systems (NYSE: PER)	$10.58	$29.69	**
Quantum Fuel Systems  (Nasdaq: QTWW)	$0.53	$1.57	**

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.

Each of these companies hit a new 52-week high last week, and judging from the opinions of our 140,000 CAPS members, at least a couple of these stocks still have a-ways to run. Huge run-ups in the stock prices of Banco Santander and Quantum Fuel, plus Dell's (Nasdaq: DELL) offer to buy out Perot at a premium, may have wrung all the value out of them. But Fools are keeping hope alive at Cintas and PG&E.

Which of these two do I prefer? At first, I thought PG&E was the better bargain. A 12 P/E and a 4% divvy are hard to beat. But closer examination of the company revealed substantial negative free cash flow at the utility. (If utilities are your thing, I'd suggest taking a look at something more like an Entergy (NYSE: ETR), where the cash situation looks more favorable.

This leaves us with just one finalist, folks: Cintas. This dual-Fool pick (Cintas has garnered recommendations from both Motley Fool Stock Advisor and Motley Fool Inside Value) just beat Street estimates for fiscal first-quarter earnings, and is riding high today. Let's see if it's got any more room to run.

The bull case for Cintas
CAPS All-Star LondonMatt liked what he saw in Cintas earlier this year, describing the uniform supply company as "[l]ike a Volvo --it's boxy, but it's good. Boring, steady, reliable business that continues to lead its field. Management eats its own cooking, so it's my kind of business."

In April fellow All-Star BoiseKen added that "the company has shown previous growth trends around 15%." Plus: "I also see their trucks all over town." (Um, which town might that be, BoiseKen?)

Our third and final All-Star commentor, TokyoIrish, wraps the bull thesis up for us and ties it with a bow: "Nice, boring company with a wide moat, selling at a meaningful discount to fair value."

Couldn't've said it better myself. Admittedly, at a 23 P/E , Cintas may not look like much of a bargain -- at least not at first glance. But consider all the facts in its favor:

• Minimal debt load. Cintas has $786 million in debt, but also carries $358 million in cash and marketable securities on its balance sheet. Even if this recession drags out longer than expected, Cintas's balance sheet remains in excellent shape to withstand it.
• Copious cash generation. Cintas has generated nearly $450 million in free cash flow over the last 12 months. That's more than twice Cintas's reported $202 million in "net earnings," giving this stock an enterprise-value-to-free cash flow ratio of roughly 11.2.
• Strong but reasonable growth expectations. Analysts on average expect Cintas to grow at close to 12% per year over the next half-decade. To me, that rate of growth more than justifies the enterprise value.

Top it all off with a modest and sustainable dividend yield of 1.6%, and I not only think Cintas is a fairly priced stock, but also that the company is undervalued. (Yes, even here at its 52-week high.)

My advice? By some today, before Wall Street catches on.

Time to chime in
Of course, that's just my opinion. Disagree? Click on over to Motley Fool CAPS and tell us why.