"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. Every day, investors read the list and tremble -- some with greed, others with terror. Within our Motley Fool CAPS investing community, these top stocks generally enjoy favorable ratings, since everyone loves a winner, but not always:


52-Week Low

Recent Price

CAPS Rating
(out of 5)

Philip Morris Int'l (NYSE: PM)




Disney (NYSE: DIS)




Oracle (Nasdaq: ORCL)




United Tech (NYSE: UTX)








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

A sigh of relief ... and then a roar
As fears of a Greek debt meltdown continue to fade, traders have released their white-with-fear grip on their Bloomberg terminals, markets have given a sigh of relief -- and stocks have turned cautiously green again. The S&P 500 just posted its third "positive" week in a row, and some of the biggest names in stock picking are once again hitting 52-week highs.

Investors appear confident that the market's upward run isn't over yet, and rate each of these stocks as good as or better than the broader S&P 500. But there's one stock in particular that they expect to smoke the averages.

Philip Morris International
CAPS member skrakow74 keeps the bull thesis on this one short and sweet: "An addictive product. What else is there to say?"

Quite a bit, as it turns out. For example, Clint35 likes the fact that the stock pays a "Good dividend," and notes that a "Declining dollar won't hurt it, Because it's a foreign company." (Actually, to be precise, Philip Morris is an American company. But to an even greater extent than a company like Coca-Cola (NYSE: KO), which makes most of its sales outside U.S. borders, Philip Morris derives literally all of its revenues outside the U.S., leaving domestic sales to former parent Altria (NYSE: MO).)

Now, why is this a good thing for investors, if perhaps not for consumers? Ki11tank argues that as a "world wide" operation, Philip Morris is free to capitalize on the trend of "emerging populations buying more commercialized smokes" at higher prices.

CAPS All-Star mrindependent agrees:

I cannot argue with the fact that selling [cigarettes] is an easy way to make money -especially overseas. I think now is a good time to load up on dividend stocks ... Philip Morris has demonstrated continued growth throughout the economic downturn and I don't expect anything to derail it soon. Thus, I think the dividend is safe.

Rolling up cash
I agree. Over the past 12 turbulent market months, Philip Morris managed to generate some $7.2 billion in free cash flow from this business -- even more than the $6.3 billion it reported as profits earned under GAAP. That's more than enough to fund the company's dividend, and means PM should have little difficulty maintaining its dividend, which currently stands at 4.4%.

When you combine that beefy dividend yield with analyst projections for 10% profits growth at Philip Morris, I believe the firm's valuation of 13.8 times free cash flow is more than justified, and see little reason for the stock to fall.

Foolish final thought
Which is not to say that I believe Philip Morris is the best way to play the international tobacco game. In fact, the more I look at the competition, the more I'm convinced that if it's profits you seek, you're better off investing in Philip Morris' international archrival, British American Tobacco. You see, despite being given a slower growth rate by analysts, British American sports a significantly lower market cap than Philip Morris, with nearly as much free cash flow. With the result that British American's price-to-free cash flow ratio comes in slightly lower than Philip Morris', at just 12.1.

When you combine that number with a higher dividend payout (4.6% vs. Philip Morris' 4.4%), it seems to me that British American may outperform even the mighty Marlboro.

Or not. I'll readily admit that the above is only my opinion. Other Fools may feel free to disagree about British American's superior value proposition, the morality of investing in Big Tobacco, or even the strategy of investing with an eye to the trend of a declining U.S. dollar. If you've got thoughts on any of the above matters, feel free to voice them right now.

Click over to Motley Fool CAPS now, and tell me why I'm wrong.

Philip Morris' stock has lagged the market badly over the past year. How do you tell a bargain stock from a value trap? Find out here.

Walt Disney and Coca-Cola are Motley Fool Inside Value selections. Walt Disney is also a Stock Advisor pick. Philip Morris is a Global Gains recommendation. Coca-Cola and United Parcel Service are Income Investor picks. The Fool owns shares of Oracle. 

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. 582 out of more than 160,000 members. The Fool has a disclosure policy