"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 Low" list at Nasdaq.com:

52-Week High

Currently Fetching

CAPS Rating

Superior  Offshore (NASDAQ:DEEP)




eTelecare Global (NASDAQ:ETEL)




Beacon Roofing  (NASDAQ:BECN)




Candela  (NASDAQ:CLZR)








Companies are selected from the "NASDAQ 52-Week Low" list published on Nasdaq.com 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.
*Superior Offshore IPO was $15 per share on April 19, 2007, closing the day at $17.54.

Once again, our list proves the converse of the "everybody loves a winner" maxim. When a stock falls on hard times, its popularity evaporates right quick. And true to form, every single stock on today's list carries a below average rating on CAPS -- every stock, that is, but one.

In April 2007, the economy was running hot. And the subprime crisis? But a twinkle in the eye of that prankster, Mr. Market. Few investors anticipated the stock sell-off that would arrive in August (although here at the Fool, we were wondering about it). Back then, a booming economy augured well for firms that could profit from that economy's need for fuel. And so it was that Superior Offshore debuted on the Nasdaq, offering investors a chance to get in on its business of building underwater structures for oil drilling. Offered at $15 per share, the stock quickly closed 17% higher.

Today, Superior Offshore sells for a 30% discount to its IPO price. Do you hear opportunity knocking at the door? Some Fools do. Let's listen in as they talk about ...

The bull case for Superior Offshore
CAPS newcomer MattHylland starts us off with an introduction to the company, verbatim from its 10-Q:

The Company generates revenues primarily by providing subsea construction and commercial diving services to the crude oil and natural gas exploration and production and gathering and transmission industries operating on the outer continental shelf of the Gulf of Mexico. The Company's customers include most of the top 20 crude oil and natural gas producers and most of the top 20 gathering and transmission companies operating in that region. [A review of the S-1 filing reveals that these customers include such names as El Paso (NYSE:EP) and Williams Companies (NYSE:WMB).]

avemii highlights the key attraction from such a business as Superior:

According to weather reports, this sessions [sic] hurricanes will be pretty bad. Thus meaning this company will extremely benefit from the damage caused since they are called upon to repair damaged drilling platforms.

The Fool's own TMFKopp agrees. "I'm a fan of the deepwater segment and it wouldn't be all that surprising if we saw some more powerful storms sweep through the Gulf. [Superior Offshore is] particularly attractive at this price." What's more -- if you look closely at the date of TMFKopp's endorsement, the stock was selling for nearly 60% more back in May. Talk about your margin of safety!

Before giving my own assessment, I have to make the caveat that I'm not at all good calling "cyclical" stocks such as Superior Offshore. According to the established wisdom (small "w"), these kinds of companies should be bought at excruciatingly high P/E multiples, and sold when their P/Es are in the basement. It's a totally counterintuitive investing strategy, and one that goes against every instinct I've got.

That said, my instincts are sending me mixed signals on Superior Offshore. The P/E of 9 sure looks cheap, but weighed against what analysts predict will be a mere 5% growth per year over the next five years, it just might be "cheap for a reason." While I certainly see the arguments in favor of a stock that's fallen so far turning around and bouncing -- I ultimately conclude that the established wisdom is right this time. Superior's PEG ratio of 1.8 tells me this is one to avoid.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Superior Offshore -- or even what the other CAPS players are saying. We also want to hear what you know about the company. Was Dean the worst hurricane we'll see this season, or do we have another Katrina waiting out there, somewhere DEEP in the ocean? A storm that could cause enough damage to send Superior's stock soaring along with demand for its services? If you've got an opinion, we've got a place to voice it.

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. 248 out of nearly 35,000 rated players. The Fool has a disclosure policy.