"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.

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 have a habit of buying "hot" stocks and trusting momentum to keep 'em moving upwards.

But if the price rises too far, 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 exactly that. These stocks have more than doubled over the past year, and they just might be ripe to fall back to earth:


Recent Price

CAPS Rating (out of 5)

Titanium Metals (NYSE: TIE)



Clean Energy (Nasdaq: CLNE)



Brigham Exploration (Nasdaq: BEXP)



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. Recent pricing and CAPS ratings from Motley Fool CAPS.

What do oil exploration, natural gas fuel for cars, and titanium have in common? The companies behind these products are some of the hottest stocks on the Street.

Perhaps rightly so. Shares of Brigham Exploration are up more than 2.5 times in value over the past year, but CAPS member StockMillionare argues that the company's numbers look almost as strong as its stock performance: "1 Year EPS Growth Rate:+51.19%. PEG: 13.6x. Gross Margins(TTM) 81.7%. Enough said."

Meanwhile, shares of Clean Energy have merely doubled in value, despite SSTURN predicting "the Govt [will soon pass] the Alternative Transportation bill" and that "[Clean Energy] is positioned to supply the infrastructure necessary." Once that happens, SSTURN believes we could see Clean Energy snapped up by an oil major like [ExxonMobil or Chevron (NYSE: CVX)]."

Right in the middle comes Titanium Metals, whose 164% appreciation over the past year isn't as zippy as Brigham's, but stronger than Clean Energy's. Yet investors see nothing "middling" about TiMet's prospects. To the contrary, they give the stock the highest marks on this week's list. But does TiMet deserve the praise?

The bull case for Titanium Metals
CAPS All-Star guurilla thinks TiMet's future is tied to a simple fact: What's good for airplane companies is great for titanium producers. "Many airplanes are reaching retirement age," and "more efficient planes require more titanium." 

As CAPS member Eudemonic points out, quoting another source: "By far the most important use of titanium is in making alloys ... useful in spacecraft and aircraft applications, which account for about 65% of all titanium sold."

CAPSnGAIN argues that "carbon fiber and titanium material demand is well positioned to skyrocket over the next 10 years." That time frame could be even longer. According to its public projections, Boeing (NYSE: BA) believes demand for commercial airplanes will amount to $3.6 trillion over the next 20 years.

That should be good for titanium producers generally, of course. But what about TiMet in particular? CAPS member evhershey1 thinks the company's a good bet to prosper from increased demand for the metal because: "They are profitable, cash flow positive, and well run, while the Titanium market is still hurting from the recession. Once people start building airplanes again they are poised to profit big time."

Good for them, but ...
... an investor can be forgiven for wondering whether there's any chance for shareholders to profit from this stock. Sure, the stock's done amazingly well for those who bought when the time was right. But now that TiMet's selling for far more than 120 times earnings, hasn't the train left the station?

Yes and no. On the one hand, TiMet's P/E certainly gives an investor pause. While better than the unprofitable RTI International (NYSE: RTI), 120-odd times earnings is more than you'd have to pay to own rival Allegheny Technologies (NYSE: ATI). Indeed, most of the titanium companies you'll find on the market today have enjoyed strong run-ups -- though none stronger than TiMet's.

Foolish final thought
All the same, TiMet's not quite as expensive as it looks. While reported income at the company comes to less than $32 million over the past year, TiMet has in fact generated free cash flow of more than $200 million, at last count.

At 10% projected long-term earnings growth, that's still probably not enough to justify the stock's current $4 billion market cap. Personally, I'd expect the stock to lag the market from here on out, as overheated expectations for titanium demand begin to peter out, and this rocket stock runs out of fuel. But that's just my opinion.

What do you think?

Titanium Metals is a Motley Fool Stock Advisor pick and Chevron is an Income Investor recommendation, but Fool contributor Rich Smith does not own shares of any company named above. You can find Rich on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 507 out of more than 165,000 members. The Fool has a disclosure policy.