"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 upward.

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 in the last half of '09, and just might be ripe to fall back to earth.


Recent Price

CAPS Rating
(out of 5)

Kansas City Southern (NYSE:KSU)



Advanced Micro Devices  (NYSE:AMD)



Human Genome (NASDAQ:HGSI)



Unisys Corp. (NYSE:UIS)



Trina Solar (NYSE:TSL)



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

Last year's last-half market rebound was kind to these stocks, but can they maintain momentum through the rest of the millennium? A survey of our 145,000 CAPS members suggests the prospects are bleak for many of last year's tech stars. But inspired by Berkshire Hathaway's (NYSE:BRK-B) purchase of Burlington Northern (NYSE:BNI), it seems a lot of Fools think they can ride the rails to higher profits in the new year.

Let's look at why Kansas City Southern wins their support.

The bull case for Kansas City Southern
Taking a gander at KCS last June, CAPS All-Star forexnutca exclaimed in amazement: "Ok...let me get this straight. A Class 1 railroad for below book value!? ... This is the type of stuff Buffett dreams of." (With the emphasis being on "type of," because as it turned out Buffett did wind up buying a railroad -- but not this one.)

Did Buffett suffer a case of "right idea, wrong railroad?" kahunacfa thinks so, arguing that the better investment today is: "Kansas City Southern ... a main freight hauler from Mexico and other Central American countries. As the United States imports more product from these countries, KSU's freight traffic will benefit." RoMeLaFool agrees: "As market recovers, an increased volume of shipping will follow. In addition to a return to previous volumes, rails can expect to steal some volume of goods from commercial trucking as the US seeks less energy dependence on foreign oil."

Newsflash: You're no Warren Buffett
So now we know why CAPS members love Kansas City Southern: They see Buffett buying a railroad. They think they understand why. They want to join in the fun. Problem is, I think they're getting it all wrong.

Here, Fools, is the hard, simple truth: You are not Warren Buffett. We are not Buffett, none of us -- and his objectives are not necessarily ours. Explaining the logic behind his Burlington big buy last month, Buffett conceded that the "company wasn't egregiously cheap," and that it could be years before the deal produces a profit for Berkshire shareholders.

But I don't think that earning beaucoup profits was ever the point. I think Buffett was simply looking out for his shareholders. Looking ahead to a day when he might no longer be at Berkshire's helm, he took the company's heaping pile of cash, invested it in a sound, safe place, and thereby ensured that even absent his stewardship, Berkshire could continue running, generating cash, and keeping shareholders safe from significant losses.

But that's not our goal. We want to invest our cash in the most attractive opportunities, and not just in the safest ones.

Problem is, that's not Burlington -- and it's certainly not Kansas City. Priced at 49 times earnings, KCS looks overvalued on its face. But when you look a little deeper, you'll find the situation is even worse. Even as it reported a "profit" for the past 12 months, KCS was busy burning through more than $150 million in free cash flow. And in fact, the company has burned cash regularly over the past five years -- despite reporting GAAP "profits" the whole time.

Foolish takeaway
Kansas City Southern may be a rocket stock -- but to my Foolish eye, it's an ICBM pointed squarely at your portfolio. My advice: Run away now. Don't take the hit.

But hey, that's just my opinion. You are certainly free to disagree -- and in fact, the more strongly you do disagree, the more we'd like to hear from you. Help keep the Fool Foolish, and the discussions interesting: Go on over to CAPS and tell us why you think KCS is a buy.

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. 1,005 out of more than 145,000 members. The Fool has a disclosure policy.

Berkshire Hathaway is a Motley Fool Inside Value and a Motley Fool Stock Advisor recommendation. The Fool has a financial position in Berkshire Hathaway.