"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 up.

Problem is, if the price goes up too much, even a great company can turn into a lousy investment (and if the company was less than great in the first place ...) Below, I list a few stocks that may have done just this. 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.



Recent Price

CAPS Rating

(out of 5):

Yongye International (Nasdaq: YONG)



Cree (Nasdaq: CREE)



Vonage (NYSE: VG)



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

Riddle me this: What do high-tech Internet telephony, LED lighting, and Chinese fertilizer have in common? Answer: The companies behind these products are some of the hottest stocks on the Street.

Over the past year, shares of Cree have more than doubled. And rightly so. After all, CAPS member Dnomyar220 predicts that eventually, "Everybody needs to transition into LED lighting ... and CREE is one of the pure breeds in the LED lighting industry." It's got a market share roughly as large as that of Philips (NYSE: PHG), and more share than lighting incumbent General Electric (NYSE: GE).

Vonage is doing even better. CAPS member wiggster1 calls the stock "a remarkable turn around story," and Vonage has the numbers to back that up, as the shares have risen an astounding 475%.

Too far, too fast?
By contrast, at a mere 105% gain, Yongye International looks like a bit of a laggard -- and yet, among Foolish investors on CAPS, it's far and away our favorite. Let's find out why.

The bull case for Yongye International
Never heard of Yongye? Allow CAPS member tytymhorau to introduce you to this: "Chinese ... micro-cap producing bioengineered nutrient compounds for plant and animal feed in China." According to tytymhorau, Yongye "Should profit from the push to improve agricultural efficiency/food quality and availability for the country's [burgeoning] population."

It's also, as All-Star investor RedDoor9 points out, a "Cash rich company operating in booming sector of the fastest growing economy in the world. I liked their move to buy the supplier of one of their main product ingredients. The business strategy they employ to add new vendors at low costs should also be a strategic advantage."

Put it all together, and rumymudda believes Yongye offers investors "Good growth potential at a good price."

Polite disagreement
And yet, how do I put this politely? I have to disagree pretty strongly with my Foolish colleagues on this one. I mean, to an extent, the CAPS members endorsing Yongye make some good points. For example, the "cash rich" comment that RedDoor9 contributed. With a market cap of barely $370 million, but $50 million in net cash on its balance sheet, fully 13.5% of this company's capitalization is backed up by cold, hard cash. That's a nice margin of safety there.

Problem is, that's all there is. Sure, Yongye built up a pretty pile of cash from last year's stock offering. But it's the reason it needed to conduct the offering at all that is the real story here. Over the entire course of its publicly traded history, Yongye has failed to contribute one red cent (yuan or renminbi) to its cash hoard from actual free cash flow. While it's true that Yongye continues to report "profits" on its income statement, the company's cash flow statement is an unbroken stream of red ink, and one that shows Yongye still burning cash at an annual rate approaching $2 million.

A modest suggestion
If you absolutely, positively feel you must invest in the agricultural fertilizer sector, why waste time on Yongye when you have the option of owning a company like PotashCorp (NYSE: POT), which -- whatever you may think of its valuation today -- has at least proven it can generate positive free cash flow from time to time. Or Mosaic, which despite all the turmoil in the sector of late is still generating cash from its business on a trailing 12-month basis.

Certainly, Fools like rumymudda can argue that a tiny, China-focused shop like Yongye has more "potential" than older players in agriculture. But even there, it seems to me that you've got better alternatives than Yongye. China Green Agriculture (NYSE: CGA), for example, carries a market cap that's $100 million less than Yongye's (and it has more cash to boot), yet it has already broken the positive-free cash flow barrier, generating $8 million of the stuff over the past year.

Rocket stock, or dud?
Maybe I'm totally off base about this (and if you think so, feel free to tell me why below, or on the Yongye discussion board at Motley Fool CAPS). But for all the world, Yongye looks to me like the very epitome of a dud investment, one that makes its living on "the kindness of strangers" who buy its secondary stock offerings, rather than fending for itself and generating cash on its own.

My advice: I wouldn't touch this stock with a 10-foot pitchfork, and you should not either.

Rich's reservations notwithstanding, both China Green Agriculture and Yongye International are Motley Fool Global Gains recommendations, and The Fool owns 'em both itself. Fool contributor Rich Smith, in contrast, does not own shares of any company named above. You can find Rich on CAPS, publicly pontificating under the handle TMFDitty, where he was recently ranked No. 491 out of more than 165,000 members. The Fool has a disclosure policy.