5 Superball Stocks

"'Don't catch a falling knife' ... 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."

So runs the thesis of my recurring Fool column "Get Ready for the Bounce," in which we search among the wreckage of Mr. Market's overturned cutlery drawer, hoping to find future winners in a pile of 52-week losers. But do we really need to sit around for a whole year, waiting for a potential bouncer?

I say nay. Sometimes, stocks fall far in far less time than a year -- and like a superball dropped from the balcony, the harder they fall, the higher they bounce. Today, we're going to look at a few equities that've suffered dramatic drops over the past week. With a little help from the 145,000 members of Motley Fool CAPS, we hope to find an opportunity or two for you:

Companies are selected by screening on finviz.com for abrupt 5% or greater price drops over the past week. 52-week high and recent price data provided by finviz.com. CAPS ratings from Motley Fool CAPS.

Which of these things is not like the others?
Whether you invest in companies that dig stuff out of the ground (Teck, Peabody), trade derivatives on said "stuff" (U.S. Natural Gas), or build the "shovels" needed to bring it to the surface (Terex), then chances are, last week wasn't your best. As 2009 drew to a close, each of these five stocks stumbled -- yet while investors haven't lost faith in any of 'em, the one they love best is a bit different from the rest.

I'm speaking, of course, of solar wafer-baker ReneSola. Why do Fools love it?

The bull case for ReneSola
CAPS member gunnar1968 praises ReneSola with Spartan terseness: "Huge market in China. Strong growth. Cheap." Continuing the caveman-speak, appleorangegreen grunts: "solar gonna boom big. up when oil back to 100. increasing usage of renewable."

And thank heavens for TMFKopp, who expressed his thoughts in complete sentences last summer:

ReneSola ... [does not focus] primarily on manufacturing solar cells, but rather on making the silicon wafers that companies such as Suntech [ (NYSE:STP)] and JA Solar [ (NASDAQ:JASO)] use to make their solar cells. So instead of trying to build the best mousetrap, ReneSola is providing springs to the mousetrap manufacturers. To me, that makes ReneSola a better pick to capitalize on the potential of solar power overall.

And yet ...
Which is not to say that I agree with my Foolish colleague. Far from it.

Oh, I understand where TMFKopp and the others are coming from here. Analysts predict that ReneSola will be growing its profit at 20% per year for the next half decade, and with a forward P/E of less than 13, I can see why some investors would be optimistic about its chances. But there are at least as many reasons to worry about ReneSola's future, as to look forward to it. Reasons like:

• Cash burn. ReneSola posted $155 million in negative free cash flow during the first half of its latest fiscal year -- several times larger than its reported $33.6 million loss under GAAP.
• Debt. ReneSola's carrying more than $582 million of the stuff, versus cash reserves of just $95 million.
• Dilution. Bankers like their loans paid in full, on time, and with interest. And with ReneSola incapable of generating the cash it needs to accomplish this, the company was forced to "seek the kindness of strangers" once again in October, selling 15.5 million American Depositary Shares (or 31 million common shares) to foreign donors ... er, investors.

Time to chime in
Call me a Grinch, call me a Scrooge, but I'm not real interested in donating my hard-earned money to the effort to keep ReneSola solvent -- and the way I look at it, that's just what an "investment" in ReneSola is. But a lot of Fools disagree. Unlike me, they do see a future for ReneSola -- perhaps you're one of them?

If you've got an opinion on the company -- pro, con, or otherwise -- then here's your chance to tell us about it. Click over to Motley Fool CAPS, and sound off.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.