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)
Accenture  (NYSE: ACN)	$24.76	$37.50	****
Walgreen (NYSE: WAG)	$21.28	$38.05	****
Check Point Software Technologies (Nasdaq: CHKP)	$16.80	$28.47	****
Yongye International	$0.65	$9.02	****
Fomento Economico Mexicano	$18.80	$45.69	*****

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 raced ahead to hit a new 52-week high last week, and judging from the opinions of our 140,000 CAPS members, they're not done running yet. Every one of 'em gets at least an above-average four-star rating on CAPS -- proof positive that Fools like their chances.

So how shall we break this five-way tie? Which of these stocks do I like best? Coincidentally, it's the very same company that issued an earnings warning last week -- "bad news" that earned it a scolding from fellow Fool Mike Pienciak, but an upgrade from Goldman Sachs (NYSE: GS).

Read on a bit, and I'll explain why I'm siding with Goldman on this one.

The bull case for Accenture
Roughly one year ago, CAPS member 6and8 introduced us to Accenture as: "The world's leading management consulting, tech services and BPO firm," pointing out additionally that "over 55% of [Accenture's] revenues are international."

Furthermore, FoolishPhilbert noticed that:

... during 2008 they have been able to generate record new business by assisting customers to develop efficiencies and cut costs; which will be every businesses' number one priority during the coming months and very likely for the next couple of years. In 2008 bookings reached an all-time high of $26.79 billion and net revenues were a record $23.39 billion ...

And it's not just the GAAP numbers that look good. As CAPS All-Star 00100 pointed out after reviewing the earnings last week, this company generates: "Excellent cash flow" and has "Zero debt."

Which brings me to why I like Accenture. Right now, the IT outsourcing industry is hot, hot, hot! IBM (NYSE: IBM) embraced it years ago. Hewlett-Packard (NYSE: HPQ) dove in earlier this year. More recently, both Dell (Nasdaq: DELL) and Xerox have made big bets on the sector. And while it's true that Accenture's guidance foresees a rough patch (recessions will do that to ya), the fact remains that when valued on its free cash flows, this company, at least, still looks like a bargain.

Compare Accenture's market cap to last year's $2.9 billion in operating income -- the company's selling for about eight times free cash flow. Or take the coming year's somewhat pessimistic guidance of $2.1 billion to $2.3 billion in free cash flow, and the multiple still works out to about 10. Either way, if Accenture comes close to hitting the near-13% five-year growth rate that analysts foresee for it, the stock seems cheap.

It's not just me saying that, either. Goldman praised management's decision to up the dividend (now verging on 2%) and buy back $4 billion in stock. That latter move, by the way, only makes sense if the stock really is undervalued. That tells us Accenture thinks its stock is cheap, and wants to take advantage of the discount while it lasts.

Time to chime in
So there you have it, folks. Accenture thinks its own stock is cheap. Goldman Sachs agrees. So do I. But we really want to know what you think.

Click on over to Motley Fool CAPS, and sound off.