5 Stocks That Just Won't Quit

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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:

Stock	Recent Price	CAPS Rating (out of 5)	Bull Factor
Syntel Inc (Nasdaq: SYNT)	$48.86	*****	94%
Rovi Corporation  (Nasdaq: ROVI)	$33.46	**	83%
UQM Technologies  (NYSE: UQM)	$5.91	*	69%
Green Mountain Coffee (Nasdaq: GMCR)	$72.89	*	67%
Deer Consumer Products	$17.99	*	40%

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

The Dow's flirting with 10,000 again, and alarm bells are starting to go off as even stocks we've never heard of ("UQM?" Really?) lurch frantically upward. But not every high-priced, never-heard-of-it-before stock has Fools equally worried. Fact is, an equally obscure company by the name of Syntel continues to enjoy strong support -- even after a near-triple off its March lows.

Is this rational? Can Syntel maintain its momentum? Let's find out, as we dig into ...

The bull case for Syntel
CAPS member NorthCarolinaKen introduced us to Syntel earlier this year:

Syntel is a US based outsourcing company ... They take over almost anything related to IT that a customer can't tackle or doesn't make sense to tackle. Customers, an insurance company for example, is in the insurance business, not in the playing with the latest tech widgets business. IT is at best a distraction and at worst a capital and a resource drain. Syntel will get the job done in the best way possible, onshore, offshore or a combination.

MavenPicker likes the company for its "excellent fundamentals, no debt and highly productive, strong growth." Earnings over the past five years have compounded at 20% per annum -- faster than rivals IBM (NYSE: IBM) or Accenture (NYSE: ACN), but not quite the stellar numbers that Infosys (Nasdaq: INFY) has managed to put up. Second fiddle to the Indian colossus it may be, but CAPS All-Star MarkusV thinks Syntel is plenty good in its own right, exclaiming: "ROA 30%? You've gotta be kidding me ... Zero debt, consistently increasing revenues, low PEG, I'm in."

Of course, it was May when MarkusV wrote those words. At last report, Syntel was raking in "only" about a 22% return on its assets. And the company's other numbers look fully as good. In the last four quarters Syntel netted 25% profit on its revenue. Also, it has no debt whatsoever (to the contrary, it's sitting on about $160 million in cash), and it's growing like crabgrass -- Wall Street predicts 18% annual profit growth over the next half decade.

But good as this all sounds, is it good enough to justify the price? After all, Syntel shares don't come cheap. The stock sells for 20 times earnings, and with free cash flow trailing reported earnings a bit, the stock fetches a 26-times multiple to its free cash flow -- a pretty penny to pay, even for an 18% grower.

"Ex" marks the spot
And yet, I cannot help but notice that these same Wall Street analysts who posit 18% growth for Syntel have consistently underestimated the company's grow-ability in the past. In each of the last four quarters, Syntel blew past earnings estimates -- twice eclipsing them by more than 30%. Combine this with a marquee client base populated by the likes of FedEx and American Express -- two companies I can guarantee you will still be in business when the recession ends -- and I see every chance that Syntel will keep marching down the growth path until somebody wises up and buys these guys out.

Time to chime in
Buy hey, that's just my opinion. I could certainly be wrong. For example ... you don't ordinarily associate asset-light business models like IT outsourcing with high capital requirements. So why is it that Syntel consistently fails to generate free cash flow at least equal to its reported profit? Is this the kind of yellow flag that should warn us that something's not quite right?

Love it or hate it, whichever way you come down on Syntel, we would love to hear your thoughts on the company. Click on over to Motley Fool CAPS and tell us what you think about it. Or heck, if you've got a more exciting stock idea -- tell us about that, too.