"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 have more than doubled over the past year, and just might be ripe to fall back to earth.


Recent Price

CAPS Rating
(out of 5)

Parker Hannifin (NYSE: PH)



Citigroup (NYSE: C)



Wells Fargo (NYSE: WFC)



Sandisk (Nasdaq: SNDK)



Boeing (NYSE: BA)



Companies are selected by screening for 100% and higher price appreciation over the last 12 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.

Since the darkest days of early 2009, a change has come over the markets. People are starting to talk about an economic recovery more and about the end of civilization as we know it, less. And with the renewed economic optimism, stocks are on the march (up) once again. In fact, each of the five companies named above sports a stock price at least twice what it was one year ago.

But can they keep the momentum going? That's the  real question for investors today.

Unfortunately, the 160,000 members of Motley Fool CAPS answer this question with a shrug of the shoulders, and a three-star rating for most of these stocks. For everyone, that is, but ...

Parker Hannifin
CAPS member stittda admires the, "Great management team, great product offerings" at Parker Hannifin.

While CAPS All-Star musclemilk13 is impressed at the company's ability to: "consistently [beat] bullish analysts' estimates. (10/12 quarters from the past 3 years). Earnings from the most recent 3 quarters have beaten by 88.2% (1/2010), 164.7% (10/2009) and 34.8% (7/2009)." (Actually, the record is even better than that. Parker has beaten consensus estimates in 22 out of the past 25 quarters.)

Which doesn't surprise glfor, who tells us that Parker: "Always manages down times well." The member continues, saying the company also boasts "Excellent cash flow."

Buy the numbers
True that. In fact, over the five fiscal years stretching from 2005 through 2009 (the company's fiscal year ends each June 30), Parker's free cash flow totaled nearly $4.1 billion. That's 14% more than the company reported as net income over the same time frame, and an average of $813 million per year.

The company's done even better recently, as free cash flow for the past 12 months swelled to $1.1 billion, giving the company an enviably cheap price-to-free cash flow ratio of just nine. So it's little wonder that many Fools feel so strongly -- and positively -- about this company. Suffice it to say that with a price this cheap, I don't think Parker Hannifin has to do much more than just meet consensus expectations for 6% long-term profit growth in order to reward shareholders handsomely. Parker doesn't appear to be a dud of a stock.

Time to chime in
But is it the best place to invest your money? Impressed as I was after reading over Parker's financials, I decided to do a little more digging, and see how its competitors were faring -- and what I found may surprise you.

Rival industrialist players Eaton (NYSE: ETN) and Honeywell (NYSE: HON), for example, both mimic Parker's performance on the free cash flow front, in that each is currently generating free cash flow far in excess of reported net income. They also sport superior profit margins and faster expected growth rates than does Parker -- and pay their shareholders much fatter dividends.

Does this mean you should choose Eaton over Parker Hannifin? Or Honeywell? Or perhaps -- just to be safe -- buy all three of 'em? You tell us. Click over to Motley Fool CAPS now, and cast your vote for the best industrialist of all:

They all look mighty fine to me. But which one's best? Tell us on Motley Fool CAPS.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 697 out of more than 160,000 members. The Fool has a disclosure policy.