Get Ready for the Fall

"The bigger they are, the harder they fall." This old saying sums up the worst nightmare of every homeowner, every gold buyer, and every investor in today's market. Dare ye buy at the top?

Every day, Nasdaq.com publishes a list of the market's top stocks -- the companies whose shares have just hit their highest intraday price of any time in the past 52 weeks. Every day, investors read this list and tremble -- some with greed (big mo', baby!), and others in pure, unmitigated, acrophobic terror (whatever you do, don't look down).

Over on Motley Fool CAPS, thousands of investors just like you are watching these same companies and voting their gut on whether they'll keep rising or stumble and fall. Usually, the ratings wax optimistic as stocks hit new highs -- because everyone loves a winner. But what do you make of it when some of the smartest investors out there are panning a hot stock?

You could heed them. You could ignore them. You could take the stock tickers and construct anagrams from 'em. For my money, though, the best course of action is to use the "52-week high" list as just a starting point for further research. After all, stocks can go up for many reasons, and it's up to you to decide how worthy those reasons are. But thanks to Motley Fool CAPS, now you don't have to make the decision alone.

With that said, let's meet today's list of contenders, drawn from the latest "52-week high" list at Nasdaq.com. What does our panel of more than 60,000 stock gurus (and counting) have to say about them?

Everybody loves a winner
When stocks soar on the wings of success, bears become rare. And yes, despite the near-universal carnage on Wall Street Friday, some stocks did still soar. Little wonder that investors rate these few (these happy few) so highly.

Er, most of them, that is. Notable for garnering lackluster investor support despite approaching a two-year high is the venerable Washington Post, which scores an anemic two stars on CAPS. Why the disdain for a proven performer? Let's listen to what our All-Stars are saying, and find out:

• For the benefit of Foolish readers living far from the nation's capital, let's start with a few words of introduction from the Fool's own TMFLucky11: "The Washington Post is one of the most well-known newspaper names in the world. ... It continues to diversify into radio, television, and the Internet, but its smaller newspapers still aren't focusing nearly enough on their bread-and-butter: local and regional news. The national and international events of the day are already covered in great detail by cable, the Internet, and newspaper behemoths (such as its flagship) ... would do well to remember this. Until it can do so -- and until it can further diversify into arenas that aren't fading into obsolescence -- I'm staying safely away."

• Fellow All-Star investor zcap agrees: "The newspaper business is tough. WPO might be the best of the breed, but the whole sector is going down quickly. I am praying for Buffett's golden touch but doubt it this time."

• But for pure, laconic get-to-the-pointedness, no one can beat CVagts' terse observation: "Newspaper publishing is dead."

Bear baiting
Mind if I interject a few comments on the above? ("Why go right ahead, Rich.")

Thanks. Don't mind if I do. First off, I disagree with the major premise of each of the above-cited Fools. Newspaper publishing per se may feel anachronistic in the age of Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) Finance -- but you can count on the fingers of one elbow the number of professional reporters kept on staff at these new-media firms. Without content produced by reporters from The Washington Post and papers of similar caliber, "Yahoo!" would quickly become "Yahoo?" So the Post's newspaper division does have a future. The company just needs to figure out how to profit from it.

Second, don't judge this paper by what you read on page A1. While known for its namesake newsprint division, the Post's for-profit education division, headlined by the firm's Kaplan business, is actually its biggest revenue producer. And when it comes to profitability, newspapers provide only the fourth biggest source of operating profit at the Post -- lagging TV, education, and cable, respectively.

However, I do agree with our All-Stars' ultimate conclusion -- just for a different reason: valuation. With profits growth projected at 9% per year over the next five years, I think the Post's 25 trailing P/E is simply too expensive. And the fact that GAAP earnings at the company exceed its free cash flow simply confirms my initial opinion on the valuation.

Time to chime in
That said, the aim of this column isn't just to tell you what I think about these high-flying stocks, or even what our Foolish CAPS players believe. What we really want is to invite you to tell us what you think about Washington Post. Will it go the way of Dow Jones' Wall Street Journal, purchased for a premium by a savvy media mogul who sees value where we see only an overpriced stock? Or will the Post languish un-bought-out, while its news division saps profits from the healthier education and television properties? Whichever theory you adhere to, tell us what you think. We're listening.

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. 328 out of more than 60,000 players. Garmin and Yahoo! are Motley Fool Stock Advisor recommendations. The Fool's disclosure policy will always catch you when you fall.