Rocket Stock or Dud?

"The bigger they are, the harder they fall." It's the worst nightmare of every investor in today's market -- buying a rocket stock just before it takes a nosedive.

Every day, WSJ.com publishes a list of stocks whose shares have just hit new 52-week highs. And every day, investors read the list and tremble -- some with greed, others with terror. In our Motley Fool CAPS investing community, these top stocks usually enjoy favorable ratings, since everyone loves a winner. But what should you do when some of CAPS' smartest investors pan one of these hot stocks?

For starters, consider using the "52-week high" list as a starting point for further research. Stocks can rise for many reasons, but a little help from Motley Fool CAPS can make it easier to figure out how worthy those reasons are. Let's see what the more than 130,000 stock gurus (and counting) in CAPS have to say about the list's latest contenders:

Five stars = highest possible CAPS rating; one star = lowest. Companies are selected from the "New Highs & Lows" lists published on WSJ.com on Thursday last week. One year ago and current pricing provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

"Everybody loves a winner"
Well, maybe not everybody. All five of the stocks named above hit 52-week highs on Thursday. But while their performances are similar, investor sentiment about them couldn't be more different. Fools expect Mylan and Kongzhong to keep chugging right along. In contrast, we've got precious little faith in the future for Fidelity National or ... the worst-ranked stock on this week's list:

Broadpoint Securities
I rather doubt that the fear of competing with Broadpoint Securities is keeping Goldman Sachs (NYSE:GS) or JPMorgan Chase (NYSE:JPM) up nights. Tiny in market cap, and even smaller in terms of revenue, New York-based investment banker Broadpoint has more in common with small-fry regional bankers such as Ladenburg Thalmann than it does with its larger New York neighbors.

Yet, while the majors can probably dismiss Broadpoint as an afterthought, Fools seem to be having the devil's own time figuring out what to make of it (this banker's propensity for name changes probably doesn't help). Only two CAPS members have penned pitches on the stock. richardrogers4 likes it (though for the life of me, I cannot figure out why). CAPS All-Star smappy does not and points to the firm's recommendation of solar stocks such as Sunpower (NASDAQ:SPWRA) and Hoku Scientific (NASDAQ:HOKU) as reasons to doubt Broadpoint's brilliance. But while you might quibble with Broadpoint's recommendations, the question we're focusing on today is not whether we should follow Broadpoint's advice, but whether we should buy the bank's stock.

Buy these numbers?
On that point, I have to admit I'm not enthusiastic. While I'll readily admit that I am no banking guru, I can at least compare the company's numbers to those of some of its peers to judge Broadpoint's relative value.

Oppenheimer Holdings , for example, is several times larger than Broadpoint in terms of revenue, and tends to be far more profitable -- yet its price-to-sales and price-to-book ratios both sit far below Broadpoint's. SWS Group and Sanders Morris Harris have similar revenue as Broadpoint, but with much better operating margins -- and again, P/S and P/B ratios that have nothing in common with Broadpoint. By all indications, therefore, I have to consider Broadpoint wildly overvalued -- even at just $4 a share.

Foolish takeaway
Listen, Fools, I know everybody got excited about Wells Fargo's (NYSE:WFC) blowout quarter last week. With the Fed handing out free money, I expect that a lot of investors today are thinking that banks can finally do no wrong. But here's the thing -- not all banks are created equal, and every number I look at tells me that Broadpoint Capital's one of the bad 'uns. My advice: Stay away.

(But hey, feel free to disagree. I'm sure there's someone out there in investor-land who knows banks better than I do and can make a bull argument in Broadpoint's favor. If you're the one, then here's your chance to sound off: Click on over to Motley Fool CAPS and give us a shout.)