Rocket Stock or Dud?

"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 stocks that may have done just that. Stocks that, according to the smart folks at finviz.com, have more than doubled over the past year, and just might be ripe to fall back to earth.

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 more about an economic recovery ... and less about the end of civilization as we know it. And as the Dow closes in on 11,000 once again: Tech is back, baby! Maybe.

Sure, shares of Intuitive Surgical, eBay, Baidu, and Western Digital have all more than doubled over the past year. But if you ask investors, the recent run-up has left each of these tech wonders running on fumes. In contrast, Fools remain uber-bullish about prospects for Titanium Metals, a company perfectly positioned to benefit as key customer Boeing (NYSE: BA) begins rolling out 787 Dreamliners by the dozen.

Is Titanium Metals the one rocket stock on today's list with fuel left in the tank?

The bull case for Titanium Metals
CAPS member targetphil3 believes it is: "[Titanium Metals] should do good. earnings forecast is excellent, good insider purchases, no debt. As economy rebounds further so should share price."

All-Star CD101C4 agrees: "Aerospace, a cyclical industry, is about to start its up movement. [Titanium Metals] has significant stake in … the growth of the industry and will move along with the industry -- perhaps more than the industry average because of its premium position titanium suppliers."

CAPS member augustspillers emphasizes Titanium Metals' "Long term relationship with Boeing. Current models of Boeing jets use 5% Titanium in bodies; new model currently being tested --with record pre-orders -- will use 20% to reduce weight and increase fuel efficiency."

A big bet on Boeing
All of which sounds incredibly bullish for Titanium Metals, right? So here's why it's wrong: In a nutshell, the company costs too much.

Listen, Fools, I'm as bullish as the next guy on Boeing's future. With the company's multiple flubs of years past now fading into history, the 787 program is finally back on track. (It's even arguable that Boeing's stock isn't such a bad bargain.) Problem is, as I've argued recently, a lot of this optimistic news has been baked into Boeing's stock price already. And not just Boeing's price. Buoyed by the Boeing bounce, shares of key suppliers Allegheny Tech, RTI International Metals (NYSE: RTI), and yes, Titanium Metals have all soared.

Titanium Metals in particular now sells for a pricey 89 times trailing earnings. And while it's true that those "earnings" do not fully reflect the company's true cash-generating potential, even valued on its more robust free cash flow, the company sells for a pricey 17.8 multiple. This seems a bit much for a stock that most analysts believe will struggle to produce much more than 12% growth annually for the next five years.

Time to chime in
Make no mistake: I have no doubt that Titanium Metals, the company, will prosper as titanium-boned Dreamliners take to the skies. I just wouldn't bet on the stock doing nearly as well as the company -- not at this price. If you want to bet on "pin action" from Boeing's business, I believe there are better ways to do that, and better bargains out there.

But that's just me.

Here's your chance to respond. Click over to Motley Fool CAPS now, and tell me why I'm wrong.