5 Stocks That Just Won't Quit

In my weekly Fool column "Get Ready for the Fall," I run Nasdaq.com's 52-week highs list through the "wisdom of crowds" meter we call Motley Fool CAPS. The result: a list of stocks that have flown so high, investors are starting to get nervous about that whole "gravity" thing. But while many stocks will indeed plunge back to Earth, some seem immune to gravity, steadily riding a rising megatrend to ever-greater heights.

Today, we'll move beyond stocks that have hit 52-week highs, and identify companies now surpassing five solid years of outperformance. Which of these will thrash the market averages for another half-decade? Here are this week's leading contenders:

Companies are selected from the "New 5-Year Highs" list published on MSN Money on Thursday. CAPS ratings from Motley Fool CAPS.

"Everybody loves a winner"
Um, not really. As this week's list demonstrates, sometimes investors watch a stock go through the roof and couldn't care less. CAPS members certainly aren't feeling enthusiastic about the prices at Pegasystems or AutoZone this week; neither United Refining nor Victory Acquisition have attracted enough interest to "earn their stars."

Turns out, the only stock on the list that investors think is worth even half a glance is a stock I've never heard of myself: AsiaInfo Holdings. But I have to tell you, Fools -- the more I look at the company, the more I like it. To find out why, let's read a little more about ...

The bull case for AsiaInfo Holdings
Although I, personally, had never heard of AsiaInfo before, it seems I'm in the minority. Nearly 240 other CAPS members have already weighed in on this little provider of software and IT security products to the Chinese telecom industry.

• Alroy101, for example, argued back in 2007 that: "China is the fastest growing economy. If you want to succeed you need to invest in China."
• Last summer, craigrow went a step further and told us why we should invest not just in China in general, but in AsiaInfo in particular: "Business in China is based on personal relationships. Often the best product or the best company is not the winner, rather, the company who's people have the best relationships win. ASIA's early participation in building the Internet backbone for China has given them that inside edge. This is a huge advantage for ASIA. Look around all of China's major industries and you'll see they're dominated by one or two companies. [For example,] Coke (NYSE:KO) is everywhere, Pepsi (NYSE:PEP) can hardly be found. Why do these companies dominate? Relationships!"
• Which begs the question: What "relationships" does AsiaInfo boast? Well, in 2007, tim20440 and hilok contributed back-to-back announcements of contracts signed with China Mobile (NYSE:CHL) and China Telecom (NYSE:CHA), predicting "more business with them" and "pin action".

Mind you, AsiaInfo will need these relationships if it's to survive in the face of stiff competition from local rivals such as former 3Com (NASDAQ:COMS) partner Huawei, and foreign competitors like Cisco (NASDAQ:CSCO). But if AsiaInfo can somehow avoid getting crushed by the big boys, its stock price today appears to offer a pretty compelling buy-in point -- it just takes some digging to learn how attractive.

At first glance, the stock's 37 P/E looks like at best a fair price to pay for what analysts anticipate will be 30% long-term growth in profits at AsiaInfo. Look closer, however, and you'll notice that AsiaInfo is one of those special companies whose GAAP earnings significantly understate their true cash profitability. Over the past 12 months, the firm has generated more than $29 million in free cash flow versus less than $19 million in reported "net earnings."

Viewed from this perspective, I figure today's price has the stock selling for a multiple to free cash flow of only 22. What's more, if you net out the firm's sizeable cash hoard to arrive at its enterprise value, the actual business -- sans cash -- is selling for a mere 15 times free cash flow. Not bad for a 30% grower. Not bad at all. 

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about AsiaInfo Holdings -- or for that matter, even what our CAPS members think. What we really want to know is whether you think this particular China play still has legs.

If you've got an opinion, we've got a place to voice it. Click on over to Motley Fool CAPS and tell us what you think.