"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.

Now I readily admit that sometimes, stocks rise for a reason. But sometimes, the rise becomes the reason. No matter how often we caution them not to, investors do have a habit of buying "hot" stocks, and trusting momentum to keep 'em moving upwards.

Problem is, if the price goes up too much, even a great company can turn into a lousy investment. Below I list a few stocks that may have done just that. Stocks that, according to the smart folks at finviz.com, have more than doubled since the beginning of this year, and just might be ripe to fall back to earth.


Recent Price

CAPS Rating
(out of 5)

Petroleo Brasileiro  (NYSE:PBR)



Starbucks (NASDAQ:SBUX)



Las Vegas Sands (NYSE:LVS)



Ford (NYSE:F)






Companies are selected by screening for 100% and higher price appreciation year-to-date on finviz.com. Five stars = highest possible CAPS rating; one star = lowest. Current pricing provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Each of these stocks has reaped huge rewards this year, but if you ask the 140,000 investors working odds on Motley Fool CAPS, it's just about time to cash in the ol' chips and leave the table. 100% profits are nothing to sneeze at, you know. No reason to get greedy ... or is there?

The bull case for Petroleo Brasileiro
When it comes to Petrobras, at least, Fools do seem ready to make one more roll of the dice. riqueferreira sums up sentiment in an obvious but irrefutable manner: "biggest company in brazil. Lots of new oil discovery (gigantic)." CAPS All-Star crepps expands on the sentiment a bit, pointing out that Petrobras boasts: "unusually strong proven reserves, and government sponsorship to profit from it."

And as fellow All-Star MajorMiner argues: "The fundemental causes of high energy cost in 2008 has not gone away. The lending crisis slowed demand, but the underlying imbalance is still there. This sets up this ADR to be a real winner."

I agree. Unless we get our spending habit fixed -- a prospect that gets bleaker every day the U.S. Congress cannot agree on legislation that could possibly reduce the deficit -- the dollar is doomed. In contrast, the prospects for profiting from Petrobras have never been brighter.

Consider: At last report, Petrobras boasted proven oil reserves totaling 9.1 billion barrels. (Petrobras also possesses sizeable reserves of natural gas, but they're inconsequential next to its oil trove.) Valued at their spot price of $78.39 per barrel, Petrobras's oil reserves equate to over $715 billion in asset value -- which for a company whose enterprise value barely reaches $220 billion, seems a sizeable discount. Essentially, you can purchase the company for 31% of the value of its assets.

Apples and oranges … and oil
Now, Petrobras detractors may object that even higher discounts to asset value can be found elsewhere in the oil patch -- and they're right. For example, industry standout ExxonMobil (NYSE:XOM) boasts 23 billion barrels of oil equivalent (bboe) but sells for a mere $345 billion in enterprise value (19% of its asset value). And ConocoPhillips (NYSE:COP) looks even cheaper. With ten bboe to its name, the enterprise is valued at $106.5 billion (13.6% of its asset value.)

But consider too the differences among these companies. Yes, Petrobras fetches a premium to its peers, but it also earns a fatter operating profit margin than its rivals do -- 21%. Exxon gets barely half that, while over the last 12 months, Conoco has actually managed to lose money on its business. So if Petrobras looks pricey, well, I'd argue it's earned the privilege.

Foolish takeaway
In a Peak Oil world, I believe investors who show patience can profit from 'most any oil company -- eventually. As for today, though, Petrobras looks best in class.

Disagree? Feel free. In fact, if you've found a better bargain in the oil patch, we'd love to hear about it.

Starbucks is a Motley Fool Stock Advisor recommendation. Petroleo Brasileiro is a Motley Fool Income Investor recommendation. The Fool owns shares of Starbucks.

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. 713 out of more than 140,000 members. The Fool has a disclosure policy.