"Don't try to 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.

Let's meet today's list of contenders, drawn from the latest list of stocks hitting new 52-week lows at Nasdaq.com:

52-Week High

Currently Fetching

CAPS Rating

Walgreen  (NYSE:WAG)

$49.10

$36.59

****

Arctic Cat (NASDAQ:ACAT)

$20.77

$10.67

*

Hot Topic (NASDAQ:HOTT)

$14.45

$6.31

*

La-Z-Boy (NYSE:LZB)

$15.20

$5.46

*

Ruby Tuesday (NYSE:RT)

$30.80

$13.11

*

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.

If there's one good thing about a broad-based market sell-off, it's that you find a lot of terrific companies getting the ol' baby 'n' bathwater treatment. They're cruelly tossed out on their rosy little bums, as if they were bums of another sort. You know -- just know -- that some of these babies will bounce right back once the suds subside.

How long will it take? No one knows. But with the market still several percent off of its highs, and its future direction uncertain, it can't hurt to sift through the wreckage. Maybe we'll find something worth buying today -- maybe just a few ideas we can revisit if the stocks get cheaper still.

Our search is made simple this week. Of the five companies making our 52-week-lows list, only one gets above-average ratings on CAPS. Better yet, it's a name we all know: Walgreen, the drugstore king. Is now the time to cozy up, or should its familiarity breed contempt?

The bull case for Walgreen
Investors clearly think Walgreen's a winner -- 94% of the CAPS players who rated it gave the company the thumbs-up.

For any investors unfamiliar with the company, let's start off with a brief introduction from GS751:

Walgreen Co. is a national retail pharmacy chain and considered the leader in innovative drugstore retailing. Walgreens pioneered many store features that are becoming standards in the industry. Among those concepts are: Computerized pharmacies, Point-of-sale scanning, Freestanding stores with drive-thru pharmacies, and Intercom Plus, Walgreens advanced new pharmacy computer and workflow system. Intercom Plus allows pharmacists to spend more time counseling patients by assigning administrative tasks to pharmacy technicians.

Qualitatively speaking, BeautifulPlumage thinks these steps help make:

WAG ... the class of the field, trades at a historically low P/E of 20 [It's now at 18.] and has a history of strong organic growth, a strong brand, solid management, virtually no debt, and would do well in an inflationary recession while [Rite-Aid (NYSE:RAD)] and [CVS Caremark (NYSE:CVS)] struggle with their heavy debt loads.

Unsurprisingly, the company's boss agrees. FOOLBEFREE quotes Walgreen CEO Jeffrey Rein:

The growth opportunity we have ahead of us is exciting. ... With the first of 78 million baby boomers turning 65 in 2011, the demand for pharmacy services will get bigger and bigger. We intend to be the best-positioned pharmacy chain in the country to serve that need, and we're on track to exceed our goal of 7,000 stores in 2010.

This aggressive growth program makes it difficult to value the company based on its free cash flow. Heavy capex spending means that over the past year, for example, Walgreen produced only $575 million in cash profits -- a far cry from the $2 billion it reported as net profit under GAAP.

Turning to the default valuation method of PEG instead, though, I must admit that I do not see compelling value in Walgreen. The company's P/E is cheaper today than when BeautifulPlumage scoped this one out, but at 18, still doesn't compare favorably to the 14% annual growth rate that analysts are predicting for the company. The resulting PEG of 1.3 may not be outrageous, but neither does it make the stock look like an obvious "bounce" candidate.

My advice: See if it drifts any lower, and get ready to pounce on the bounce.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Walgreen -- or even what other CAPS players are saying. We also want to hear your thoughts. Click on over to Motley Fool CAPS and tell us what you think.

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 1,180 out of more than 40,000 rated players. La-Z-Boy is an Income Investor recommendation. The Fool has a disclosure policy.