"Don't catch a falling knife." Thus commandeth the old saw (to mix a cutlery metaphor).

But if people weren't tempted to catch cutlery in the first place, there'd be no need for this little bit of investing wisdom, would there? The idea of buying a former highflier at a discount price certainly has its attractions. The trick, of course, is to increase the odds that when you make your grab, you're catching haft, not blade. That's where we come in.

In The Motley Fool's continuing effort to keep your investing dollars safe, today we once again assume our position beneath Mr. Market's silverware drawer. As the knives plummet, we'll measure who's fallen farthest. Then we'll head over to Motley Fool CAPS, and ask which of these stocks Foolish investors think are ready to rebound to new highs -- if any.

With that said, let's meet today's list of contenders, drawn from the latest 52-week lows list at MSN Money:

52-Week High

Currently Fetching

CAPS Rating

Rural/Metro Corp. (NASDAQ:RURL)




Citadel Broadcasting  (NYSE:CDL)




Journal Register  (NYSE:JRC)








BioCryst Pharmaceuticals  (NASDAQ:BCRX)




Five stars = highest possible CAPS rating; one star = lowest. Companies are selected from the "New 52-Week Lows" list published on MSN Money on the Saturday following close of trading last week. 52-week high and current pricing provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Knives and knaves
In today's edition of MSN's "shot list," Mr. Market has dealt us a straight flush -- five companies that investors would like to flush down the commode. Not a one of them gets so much as a middling three-star rating on CAPS. Ah, the joys of scraping the bottom of the market's barrel, looking for treasure buried in the crud.

Obviously, we're seeing no obvious winners this week. But we do have a company that more than three-dozen investors have reviewed. With 27 outperform ratings to its 9 underperforms on CAPS, at least a few investors think "terrestrial" radio operator Citadel Broadcasting can thrive in a Sirius Satellite (NASDAQ:SIRI) world -- especially after it absorbs Disney's (NYSE:DIS) ABC Radio unit.

Ready to bounce?
But will those investors be rewarded for their faith in the company? Let's examine the logic behind their support for Citadel:

  • All-Star investor MylesPatrick introduces us to the company: "Citadel Broadcasting Corp. is the fourth-largest radio broadcasting company in the U.S., based on revenues. It operates 165 FM and 58 AM stations across 24 states. After its merger with Disney's ABC Radio, which is expected to close June 12, Citadel will gain an additional 22 radio stations and the ABC Radio Network. The Federal Trade Commission is forcing Citadel to sell 11 stations immediately after the merger to comply with regulations."
  • darkflame, adopting a "strategy introduced by Ben Graham," recommends the stock based largely on its low price-to-book value, which currently stands at 0.62. That's a valuation that fellow All-Star JudasTouch calls "too far below book value to ignore."
  • EverydayInvestor cites two additional points in Citadel's favor: an attractive price-to-free cash flow ratio and a "nice yield."

And in fact, EverydayInvestor may be understating the case. At just 5.6 times trailing free cash flow, Citadel's valuation looks positively mouthwatering. And the yield isn't just "nice" -- if left in place as-is, it works out to nearly 12%.

Time to chime in
Any dividend can be slashed, of course. And when you factor in debt, Citadel does carry an enterprise value of 11.6 times free cash flow. Still, the firm's strong free cash flow seems like just the ticket to attract the insatiable appetite of private equity.

So what do you think? Is the bull case here just too good to be true (as CAPS investors overall seem to think), or are these four All-Star investors on to something big? Crunch the numbers, then come on over to CAPS and tell us what you think.

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

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 474 out of more than 30,000 raters. Disney is a Motley Fool Stock Advisor pick. The Fool has a disclosure policy.