Get Ready for the Bounce

"Don't catch a falling knife," as the old saw commands. (Pardon my mixing of cutlery metaphors.) The idea of buying a former superstar stock at a discount price certainly has its attractions, but you've got to make sure you catch the haft -- not the blade. That's where Motley Fool CAPS comes in.

Today, we once again stand beneath Mr. Market's silverware drawer, measuring which knives have fallen the farthest. Then we'll call on CAPS to ask which of these stocks -- if any -- Foolish investors believe are ready for a rebound. Let's meet today's list of contenders, drawn from the latest "52-Week Lows" list at WSJ.com:

Companies are selected from the "New Highs & Lows" lists published on WSJ.com on Friday last week. 52-week high, recent price, and CAPS ratings from Motley Fool CAPS.

What's got these stocks scraping their 52-week lows lately? The reasons vary from blindingly obvious to frustratingly opaque.

Beginning with Amedisys, we find the stock struggling through Month No. 3 of a long (and accelerating) decline. It all began in April with a Wall Street Journal investigation into whether Amedisys and fellow home health care providers like Almost Family (Nasdaq: AFAM), Gentiva Health (Nasdaq: GTIV), and LHC Group were gaming the Medicare reimbursement system, proceeded to official inquiries by the Senate and SEC, and is now culminating in the expected wave of class action lawsuits.

Contrasted with this litany of troubles, VCA Antech's bad news doesn't even sound all that bad. Antech missed an "earnings estimate" last week, and lowered guidance for the rest of the year. But at a forward P/E of just 12.2, against 13.7% projected long-term growth, I'm not at all convinced WOOF is the dog of an investment most investors seem to think it is.

Of course, the best news of all -- the greatest disconnect between a slipping stock price and the lack of news to explain it -- comes to light at Hologic. Here we have a company devoid of any news of note in recent weeks (and certainly no bad news). Hologic's beloved of investors and boasts a superior four-star rating on CAPS. But is that enough to make the stock a buy? Let's find out.

The bull case for Hologic
CAPS member MichaelKnows calls Hologic "the leader in women's health care in over nine sectors." (For example, Hologic boasts a 60% share in the mammography market, making it bigger than General Electric's (NYSE: GE) health-care business, and far ahead of Siemens (NYSE: SI).) And MichaelKnows sees even more growth ahead: "Future acquisitions, global expansion, and Tomo approval will help company grow."

Granted, much of Hologic's growth comes in the form of acquisitions. In fact, Hologic just picked up a Canadian medical imaging shop for $85 million a few weeks back, part of the company's long-term strategy as a "serial acquirer," according to CAPS All-Star kcanant.

But could the same thing that's good for Hologic's goose be good for the investing ganders, too? Fellow All-Star investor stockworldpicks predicted last summer that "takover rumors should push the stock to at least $25." And I have to say I see a lot of merit to such a thesis.

Sure, selling for 24 times trailing earnings, Hologic doesn't look like the kind of screaming bargain that would attract an acquirer. Not on the surface, at least. But dig a little deeper, and what do we find? A company with a manageable debt load of just $1 billion, generating $476 million in free cash flow per year. An enterprise valued at less than 10 times this free cash flow, and one that is growing, at nearly 10% per year.

Time to chime in
I can see how a cash cow of a business like this might entice acquirers interested in milking it. I can also see how, at today's depressed price, Hologic shares might reward investors even if the company remains a stand-alone business. But never mind what I think. What is your opinion of Hologic?

Tell us about it on Motley Fool CAPS.