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 65,000 stock gurus (and counting) have to say about them?

Everybody loves a winner
When stocks soar on the wings of success, bears become rare. So it comes as no surprise that the majority of the stocks on today's list enjoy above-average ratings. Two stocks, however, lag in the estimation of Foolish stock pickers: Google -- perpetually panned for its priciness -- and 1-800-Flowers.com. We'll pick on Flowers today.

The bear case against 1-800-Flowers.com
CAPS players don't like 1-800-Flowers.com. I mean they really don't like it. Among the 165 investors who've rated the stock, 59% rate it a likely underperformer. What's more, the "smart money" -- our CAPS All-Star investors -- waxes even more negative, with 66% expecting Flowers to wilt. Why all the negativity?

• The Fool's own TMFMapleLeaf argues that: "Terrible customer service will catch up with them. Poor choice and/or no control over the local flower companies that they use to deliver."
• All-Star investor Jeffreyw echoes the sentiment: "Freshness and quality are not best in the industry, customer service is slipping. Uses contractors in the network like FDS and doesn't have the quality control of Calyx and Corolla who keeps it mostly in house from the growers."
• Meanwhile, fellow All-Star CyberPawn says: "You can't help but wonder when you see Net Tangible Assets, Operating Income and Nett [sic] Income all decrease on a year-on-year basis. Yet Stockholder Equity remains the same due to an ever increasing Goodwill (34 to 63 to 131) ..."
• Special mention for style over content, though, must go to CAPS player Brxcqqq, with the inventive pitch: "1-800-UNDERPERFORM.COM, STINC."

Before I close, I should mention that I have an underperform rating of my own on Flowers, in which I pan the firm's "negative free cash flow and Enron-like margins." To which I should add two caveats:

First, I've been consistently wrong on the stock, which has outperformed the market by 124 percentage points over the year since I rated it. Second, part of the reason I rated Flowers an underperformer -- its failure to produce free cash flow -- is no longer accurate. The firm generated $14.3 million in free cash flow over the past 12 months. While that's not as much as it reported in net income during the period, it's undeniably a positive number.

Time to chime in
But does the presence of free cash flow justify buying a stock that's priced at 50 times that free cash flow? You tell me.