"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 'em moving upwards.

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 doubled (or nearly so) over the past year, and just might be ripe to fall back to earth.

Companies

Recent Price

CAPS Rating
(out of 5)

General Moly (NYSE: GMO)

$5.63

****

US Gold Corp (NYSE: UXG)

$6.24

***

TransGlobe Energy (NYSE: TGA)

$14.52

***

Companies are selected by screening for 100% and higher intraday 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.

What does gold mining have to do with oil exploration? What do either of these endeavors have in common with the mining of molybdenum? All three businesses dig valuable "stuff" out of the ground. And thanks to rampant fears that runaway government spending will devalue the dollar, a run-up in commodities prices has sent the prices of such "stuff" soaring.

The stock prices of companies involved in mining that stuff have come along for the ride. Oh, I understand that it may not feel like it after a week like last, but even after the sell-offs of the past few days, investors in US Gold Corporation are still sitting atop a whopping 163% return on their investment for the past 12 months. General Moly shareholders are 113% richer, while TransGlobe owners enjoy a staggering 321% paper profit. But is the decline in stock prices we've recently seen just the first downward slip in a longer slide -- or a pullback that sets the stage for further gains?

If you subscribe to the latter theory, then your instinct might be to buy the cheapest stock on this list, molybdenum producer General Moly, hoping it has the greatest room to run. Coincidentally, that seems to be the same thing many Fools are thinking, as they rate General Moly the most attractive stock today. Are they right?

The bull case for General Moly
According to CAPS member modestus1, they are. The theory on this one is elegantly simple, says modestus: "Molybdenum going higher." And with it, General Moly.

elvoid agrees, noting that "Moly is an important part of stainless steel, other alloys...a strategic commodity." (One of several that China seems intent on embargoing, by the way -- a factor that's helped bolster the stock prices of rival moly plays like Molycorp (NYSE: MCP).)

And according to CAPS All-Star kirkydu, this sets the stage for beaucoup profits at General Moly: "As the world economy rebounds over the next several years, scarcity of many resources will develop later in the decade. Molybdenum, which is added to iron ore to make steel, is in short supply. General Moly is in the final stages of opening up production of a new mine (Mt. Hope) and early stages of another (Liberty) in Nevada."

Generally unattractive
But therein lies the rub: If General Moly "is in the final stages" of anything, that's arguably just another way to say "it has not yet started" doing said thing -- which would actually be pretty accurate. With the grand-opening ribbons yet to be cut on its hypothesized mines, General Moly currently doesn't even have revenue to its credit, much less profit or free cash flow.

Don't get me wrong -- I admit the possibility that the stock could "work out for investors." After all, if you value the company on the one metric for which it has actual, positive, crunchable numbers, the company's price-to-book valuation of 4.3 is cheaper than more established mining businesses like Freeport-McMoRan (NYSE: FCX) or BHP Billiton (NYSE: BHP). I suppose you could argue that this makes the stock "cheap," or even a candidate for purchase by a larger industry player.

Personally, however, I'm not a big fan of investing in pipedream stocks. They too often turn out to be duds. If you absolutely, positively must invest in a company that mines molybdenum, I still think that Thompson Creek (NYSE: TC) is your best bet. Profitable where General Moly is not, generating free cash flow where General Moly isn't, and selling for a price-to-book valuation that's multiples lower than what General Moly (or Freeport or BHP for that matter) sports, Thompson still looks to me the likely best way to play the rare earth run-up.

Disagree? Feel free. If you've got a few words to say in support of General Moly, say 'em here.

Fool contributor Rich Smith does not own (or short) shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 627 out of more than 170,000 members. The Fool has a disclosure policy.

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