"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. On our Motley Fool CAPS investing community, these top stocks usually enjoy favorable ratings, since everyone loves a winner.

But not always ...


52-Week Low

Recent Price

CAPS Rating
(Out of 5)

Discovery Communications (NASDAQ:DISCA)




Teva Pharmaceutical  (NASDAQ:TEVA)




Schering-Plough  (NYSE:SGP)




Ford Motor  (NYSE:F)








Companies are selected from the "New Highs & Lows" lists published on WSJ.com on Friday last week. 52-week low and recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Drugs and cars -- ordinarily, they don't mix, but this week we find representatives from each industry hitting new year-long highs. Our CAPS community clearly prefers the former, giving high marks to both Teva and Schering-Plough, while dismissing both Ford and AutoNation as overpriced and unlikely to beat the market over time.

As for the stock most likely to succeed, that's easy enough: Because in the depths of the recession, America's investors seem to have gone media-crazy. Last week, we profiled Marvel Entertainment (NYSE:MVL), its amazing leap to the top of the charts, and its value relative to big-screen rivals like Disney (NYSE:DIS) and Time Warner (NYSE:TWX). We again find investors putting their money on media stocks today, but this time we're going small-screen with ...

The bull case for Discovery Communications
CAPS member OklaBoston sees compelling numbers at Discovery, calling the stock's P/E "reasonable, if a bit higher than I'm really comfortable with. Equity growth seems to be accelerating."

But investing isn't always about the numbers. Last year, JoyofMoney, for example, endorsed Discovery as "a personal pick based on beliefs of the educational good derived from such entities as the Discovery Channel. I have always been an advocate for education and this stock presents a different twist in that it works with the media side of things. In the long term it should only gain strength."

In a similar vein, but coming at Discovery from a somewhat different angle, is zazapicola, who confided in late 2007 that the "[f]amily cannot get enough of men eating bugs, someone shoveling poo and guys busting myths."

(Psst! Discovery Channel! I think you just found your next advertising campaign!) But have investors discovered their next great investment? Now that's the real question.

And the answer is … maybe. Discovery generates significant free cash flow from its business, and carries a long-term-debt-to-equity ratio that sits higher than that of Disney and Time Warner but lower than CBS. As for the valuation -- sure, I share OklaBoston's concern about this company's lofty price-to-earnings ratio. Here at its 52-week high, Discovery sells at more than 23 times trailing earnings, and for almost 16 times what analysts expect it to earn next year.

That's quite a premium to, for example, CBS's forward multiple of 10. But on the other hand, analysts expect CBS's profit to decline over the next five years, while Discovery is predicted to grow at 17% per year. On balance, therefore, I cannot say that Discovery is the cheapest stock I've ever seen -- but the valuation does not look unreasonable to me. While the stock's not a bargain basement, I do not believe that it's doomed to fall.

Time to chime in
But hey, that's just my opinion. And the aim of this column isn't just to tell you what I think about Discovery Communications -- or, for that matter, even what our CAPS members think. We really want to know what you expect to see happen to Discovery. Got an opinion? Great. We've got a place where you can tell people about it.

Motley Fool CAPS : It's fun, it's free, and it just might make you famous.

Disney and Marvel Entertainment are Motley Fool Stock Advisor recommendations. Disney is also an Inside Value pick.

Fool contributor Rich Smith owns shares of Marvel Entertainment. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 868 out of more than 135,000 members. The Fool has a disclosure policy.