"Don't catch a falling knife," as the old saw commands. (Pardon my mixing a cutlery metaphor.) The idea of buying a former superstar stock at a discount price certainly has its attractions, but you've got to make sure you catch the haft -- not the blade. That's where Motley Fool CAPS comes in.

Today, we once again stand beneath Mr. Market's silverware drawer, measuring which knives have fallen farthest. Then we'll call on CAPS to ask which of these stocks -- if any -- Foolish investors believe are ready for a rebound. Let's meet today's list of contenders, drawn from the latest "New 52-Week Lows" list on wsj.com:


52-Week High

Recent Price

CAPS Rating

(5 max):





PepsiCo (NYSE:PEP)




Ingersoll-Rand  (NYSE:IR)




Arch Coal  (NYSE:ACI)




Manitowoc  (NYSE:MTW)




Companies are selected from the "New 52-Week Lows" list published on wsj.com on the Saturday following close of trading last week. 52-week high and recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Knives and knaves
It's true; 387 NYSE-listed stocks closed out the trading week Friday at their lowest prices in a year. Likewise on the Nasdaq: One out of eight listings -- 350 stocks in all -- hit rock bottom on Friday.

With so much bad news, you can be forgiven for thinking the sky really is falling. Me, I've got a different point of view: I think we're in a turkey shoot -- and I'm not the only one. Look up above, and you'll see that today's list of NYSE lows is chock-full of stocks with five-star ratings. Five stocks that the world seems to hate, but that CAPS members love.

Now, they've all got something going for them, but personally, when I run the numbers, one of these stocks stands out far and above the rest. How far? Oh, about a crane's height.

The bull case for Manitowoc
Diversified industrial conglomerate Manitowoc has a big category name, but as industrial stalwarts go, it's actually of pretty manageable size -- barely a billion bucks in market cap. It's also a very focused company, and getting focused-er (as we'll discuss in a moment), manufacturing two primary products: cranes and cookware.

  • Of the two, it's Manitowoc's first and largest business segment that elicits aspirations to allegory from CAPS member christianphil: "Cranes are large, long-legged and long-necked birds. They are opportunistic feeders that change their diet according to the season. Opportunity knocks."
  • Likewise with HHIBeachBum, who in May recommended the stock because: "Manufactring of cranes is a hot market world wide. All of [Manitowoc's] competitors have full order books with new orders having a three year delivery. With the Euro/U.S. Dollar exchange rate the way it is, [Manitowoc] has the most cost effective product available from the big three crane manufacturers."
  • Finally, and continuing the all-cranes, all-the-time theme that this column is rapidly taking on, dhenhouse tells us that: "Nearly EVERY windmill around the world is being built with a [Manitowoc] crane."

Now, getting back to the "focused-er" bit I mentioned above. Manitowoc management was roundly castigated (including by yours Fool-y) for overpaying earlier this year to acquire Enodis (a stock that Motley Fool Hidden Gems recommendation Middleby (NASDAQ:MIDD) had previously passed on because it was too expensive). Manitowoc paid up, despite the rich valuation, and took on a boatload of debt to do it.

But no sooner had Manitowoc expanded its food service division with the addition of Enodis, than it went to work paying down the debt. How? By selling off the Manitowoc Marine Group (MMG) shipbuilding division to Italy's Fincantieri, which will cover about 10% of the Enodis purchase. MMG has partnered with Lockheed Martin (NYSE:LMT) in building two of the Navy's Littoral Combat Ships. In selling the division, Manitowoc seems to have deftly sidestepped what now appears to be a slowdown in the U.S. defense industry -- a move that I must admit smacks of management genius.

Admittedly, I remain skeptical of the Enodis purchase that made this move necessary in the first place. From a free cash flow perspective, Enodis is less than half as profitable as Manitowoc, despite carrying a higher price tag.

Still, my calculations suggest that post-merger (and before selling MMG), a combined Manitowoc-Enodis would have roughly $372 million in trailing free cash flow. If you take Manitowoc's current market cap and add the $2.1 billion in debt it must take on to finance the Enodis acquisition, that still values the combined company at less than 9 times its free cash flow. To my mind, that's undervalued if Manitowoc can achieve the 13.5% long-term growth that most analysts predict for it.

A big "if" in today's economy, granted. But the margin of safety seems wide enough to encompass it.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Manitowoc -- or even what other CAPS players are saying. We really want to hear your thoughts. Click on over to Motley Fool 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. 599 out of more than 120,000 members. Middleby is a Motley Fool Hidden Gems recommendation. The Fool has a disclosure policy.