5 Stocks That Just Won't Quit

In my weekly Fool column "Get Ready for the Fall," I run Nasdaq.com's 52-week highs list through the "wisdom of crowds" meter we call Motley Fool CAPS. The result: a list of stocks that have flown so high, investors are starting to get nervous about that whole "gravity" thing. But while many stocks will indeed plunge back to earth, some seem immune to gravity, steadily riding a rising megatrend to ever-greater heights.

Today, we'll move beyond stocks that have hit 52-week highs, and identify companies now surpassing five solid years of outperformance. Which of these will thrash the market averages for another half-decade? Here are this week's leading contenders:

Companies are selected from the "New 5-Year Highs" list published on MSN Money on Friday. CAPS ratings from Motley Fool CAPS.

Hot stocks leave investors cold
The last few weeks have been rather ... let's say ... "unpleasant" for investors in general. And yet, the Dow's still crowding 10,000, and some stocks continue to hit record highs -- the four named above, for example.

The question in many Fools' minds, though, is why these stocks keep climbing. I mean, take the three biotech plays named above -- not a one of them is profitable. Why Dendreon doesn't even have any appreciable revenue, at least until Provenge gets approved (assuming it does). So why are those stocks hitting five-year highs? Hope?

But that just makes today's top-ranked stock stand out all the clearer.

Shengkai Innovations is for real
Now I know what you're going to say. "Shengkai Innovations? Never heard of it. Don't want to hear about it." And I admit: The name doesn't exactly inspire confidence in the heart of the value investor. "Shengkai Innovations" sounds like some kind of Chinese start-up R&D shop, probably unprofitable, almost certainly a value trap.

But it isn't. Shengkai Innovations is for real.

Boasting a customer list packed with local powerhouse names such as Huaneng Power International (NYSE:HNP), China Petroleum & Chemical (NYSE:SNP), and PetroChina (NYSE:PTR), Shengkai is in fact the furthest thing from a typical U.S. start-up shop.

It doesn't make e-widgets -- as CAPS member kamp2 informs us:

Shengkai makes ceramic valves for commercial use. Their patented product is harder than steel and has a much longer life span than steel valves. They have a new plant that should open this summer and will triple their production.

It doesn't lose money. As CAPS All-Star ZachMansell reminds us: "Sometimes the most boring businesses can be the most profitable." And indeed, Shengkai is the only profitable company on today's list, sporting a not unreasonable P/E of 20, generating $15 million in free cash flow over the past four quarters, while generating $14.5 million in net income. (In fact, Shengkai has been profitable and free cash flow-positive every fiscal year back through the one ending June 30, 2006.)

And, it doesn't carry any long-term debt. To the contrary, CAPS member danpuperi praises Shengkai for having "plenty of cash on hand," among other things. Shengkai's balance sheet looks clean as a whistle, boasting more than $40 million in net cash.

Time to chime in
I have to say, Fools, that while I looked askance at this name initially, the more I dig into the numbers, the more I like it. Of course, the purpose of this column isn't for me to tell you about the company, but to invite you to tell us your opinion of the stock. After nearly quintupling in value over the course of the past year, can Shengkai stay this high? Will it power higher? Or are its best days behind it?

Click over to Motley Fool CAPS now, and tell us what you think.

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