Friday's Rocket Stocks

Ask a cheapskate value investor to buy a stock that's achieved a new 52-week high, and you'll get one of two responses:

• Hysterical laughter.
• Sudden nausea.

Feel sorry for investors like that, Fool.

How many times has Google touched a 52-week high on its way to yesterday's close of $663.97? Too many to count, of course. Those who panicked at the thought of buying at the top have missed out on a six-bagger.

Let that be a lesson. Rocket stocks -- that is, high-growth stocks that are also realizing heavy price appreciation -- are sometimes worth buying.

Rocket stocks, not rocket science
And sometimes they're worth buying in bulk. Think of Baidu.com. My buddy Rick Munarriz recommended China's top search engine to our Rule Breakers subscribers at $83.37 in October of last year.

I thought he was nuts. I mean it. The stock was both expensive and on a tear. So I argued against buying it in a January duel here at Fool.com. Now Baidu is a four-bagger. How I wish I had listened to what Rick was telling me those months ago.

Don't do as I did. Never assume an expensive stock is too expensive. What looks like a cliff could really be base camp on a climb toward the summit of Everest. Each day in this column, with the help of the 73,000 pro and amateur stock pickers in our Motley Fool CAPS community, we'll seek to find those still climbing.

Our candidates will be found daily in the 52-week high lists at The Wall Street Journal. But few highfliers will make the cut; we're looking for stocks expected to boost net income by at least 15% annually over the next five years and which earn at least three of five stars from our CAPS contingent.

Here is today's top five for your consideration:

What to choose? Business Objects has long been a leader in the booming business-intelligence market and, as a result, will soon be acquired by SAP (NYSE:SAP) for $6.8 billion. Teva leads in producing generic drugs. And Russia's Wim-Bill-Dann Foods has long been a favorite of my Foolish colleague Rich Smith.

Here comes ... The Negotiator
But for me, all of these stocks pale when compared with Priceline.com, which David Gardner picked for Motley Fool Stock Advisor in the summer of 2004. Subscribers who bought at the time have since earned a four-bagger.

Talk about a turnaround. At one time, Priceline.com shares were about as appealing as a Bill Shatner toupee from Star Trek V: The Final Frontier. If you've never seen the film, here's all you need to know: The antagonist spends most of the movie talking about pain. Lots and lots of pain.

But I digress. This once-and-future dot-com king blew away Wall Street with its third-quarter report. Per-share earnings more than doubled. Revenue rose 33%. And while Priceline.com didn't publish a cash flow statement, there's $84 million more in cash and investments on its balance sheet today than there was in December. Impressive, no?

I'd say. Can the good times continue? A 1.26 PEG ratio suggests that Priceline is no worse than fairly valued, even after Friday's 23% gain. Yet in CAPS, investors have been more bearish than bullish recently, mostly on the basis of valuation. Witness All-Star KingMinusTouch, who last week wrote that Priceline's P/E, currently 56, is "too high."

Perhaps, but I don't buy it. Unlike peers Expedia (NASDAQ:EXPE) and Orbitz, Priceline has been posting positively huge gains in return on capital. As long as that continues, its shares should keep heading higher.

Do you agree? Disagree? Let us know by signing up for CAPS today. It's 100% free to participate.

See you back here tomorrow for more rocket stocks.