"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 do have a habit of buying "hot" stocks, and trusting momentum to keep them moving upwards.

But 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 soared too high. According to the smart folks at finviz.com, these companies' shares 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):

Stillwater Mining (NYSE: SWC)



Las Vegas Sands (Nasdaq: LVS)



Power-One (Nasdaq: PWER)



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.

"These are a few of our favorite things..."
While you might not think that platinum mining has much to do with gambling or power inversion, the three stocks named above do have one thing in common -- they're three of Wall Street's favorite things. And down here on Main Street, each of these four companies has fans as well.

Take CAPS member MADBOYMCCABE, for example. Arguing that "turbines and solar panels are [useless] without the meens to convert them into a usable form," MBM asserts that the real "heart of alternative energy" is "power storage and conversion" -- which just happens to be Power-One's stock in trade.

Fellow CAPS member udflyerz also likes Power-One's partners, noting that it's got a "long term agreement with [Emerson (NYSE: EMR)] in place."

Taking a completely different track, NEVERFADE prefers the odds in Vegas -- and Southeast Asia -- over the risk of betting on alternative energy. Predicting that Las Vegas Sands' "new Resort in Indonesia [will] be a smashing success due to lack of competitors," and that the company will rake in ever more money from "occupancy and misc spending as Vegas becomes less about gambling and more about pool parties and nightclubs," NEVERFADE bets on a classic.

Of course, if it's classic get-rich schemes you're after, it's hard to beat "gold mining" for eternal appeal. Stillwater Mining tends to focus its efforts on platinum and palladium, of course, but the principle's the same: There's money in them thar hills. Stillwater's won a four-star rating on CAPS, twice as good as its peers on this week's list. Let's find out why, as we dig into...

The bull case for Stillwater Mining
CAPS member yanivicious thinks we're in the middle of a "longterm precious metals bull market" sparked by "growing auto & electronics sales in emerging markets like china. platinum & palladium you can't go wrong."

Why is that? All-Star investor 3DeeFool attributes it to the Nissan Leaf, Chevy Volt, Toyota (NYSE: TM) Prius, and Ford (NYSE: F) electric Focus -- all of which are either on the market now, or due to hit car lots within the next few months: "Electric/hybrid car manufacturers in NA and Japan will need much more of these metals as production ramps up."

Or, as CAPS superstar TSIF puts it:

recession or contraction or the sky is falling or not, you're going to need the palladium and the platinum. They're 'RARE' metals and known supply is limited. Russia spent years manipulating the market as a primary supplier. Those days are limited. Mark this post, but don't go in over your head either! Stillwater mining has to PROVE that they know how to profitably run a minining company.

Stillwater gets a move on
Fortunately, the company's been doing just that. For years, I've dismissed Stillwater as seemingly incapable of generating consistent cash from its business. Nearly one year ago, I mentioned how it had gotten "deep in debt" as a result. But fast-forward just a few months, and what do we find today?

  • A company with $32 million more cash than debt on its balance sheet.
  • A business that generated $51.6 million in free cash flow over the past 12 months -- fully twice what it reported as net income -- and which has grown its profits 26% annually over the last five years.
  • A stock that, by just about any measure you can name, widely outclasses its closest rival, Canada's North American Palladium (NYSE: PAL).

Time to chime in
Call me an optimist, but if the company can keep up this kind of performance, I see every possibility for Stillwater to keep on growing far into the future. But that's just my opinion.

What's yours?

Ford Motor is a Motley Fool Stock Advisor pick and Emerson Electric is a Motley Fool Income Investor recommendation, but 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. 562 out of more than 165,000 members. The Fool has a disclosure policy.