"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.

Every day, finviz.com publishes a list of stocks whose shares have just hit new 52-week highs. Every day, investors read the list and tremble -- some with greed, others with terror. Within our Motley Fool CAPS investing community, these top stocks generally enjoy favorable ratings, since everyone loves a winner. But that's not always the case:


52-Week Low

Recent Price

CAPS Rating (out of 5)

Potash of Saskatchewan (NYSE: POT) $83.85 $188.30 ****
Oracle (Nasdaq: ORCL) $21.44 $33.47 ****
US Bancorp (NYSE: USB) $20.44 $28.37 ****
General Electric (NYSE: GE) $13.75 $21.33 ****
Developers Diversified Realty (NYSE: DDR) $8.84 $14.44 *

Companies selected by screening for new 52-week highs hit on the Thursday before publication. Low and recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Whenever a stock is seen hitting new 52-week highs, investors naturally wonder how long it can stay there -- the law of gravity being what it is. This week, however, CAPS members seem unworried by the valuations of the most of the stocks on our list. But are they right to be so complacent?

After all, not one of these companies comes near to fitting the value investor's Holy Grail of a 1.0 PEG ratio, the proverbial definition of a "cheap stock." GE's probably closest to the mark, at 20 times trailing earnings and a 13% projected growth rate, but even that falls far short. Meanwhile, with BHP Billiton (NYSE: BHP) now out of the running to buy Potash, that stock's looking mighty pricey up there, north of $188 a share. So when searching for a stock that likely to fall, you might think I'd lock my targets on Potash today -- I mean, 32 times earnings, 15% growth rate -- that's clearly the overpriced choice of the day, right?

But no, in fact, not only do the ratings of our CAPS members tell us there's a "weaker link" on today's list. Curiously, it happens to be the stock with the lowest share price on the list. Read on, to learn why 170,000 Fools (and counting) are telling us that the worst stock in the world is ...

Developers Diversified Realty
When seeking out unstable stocks, the REIT industry mightn't ordinarily be your first place to look. If the one thing everyone knows about real estate investment trusts is that "God isn't making any more land," and the other thing everyone knows is that REITs pay great dividends, then what can explain the disdain for Developers Diversified?

Basically, it all comes down to the numbers. Over the years, CAPS members have described the fundamentals at unprofitable Developers Diversified as ranging from "poor" (CAPS member hrtrader) to "no[ne]" (CAPS member twopairfullhouse). Developers Diversified currently has a track record of no profits earned over the past 12 months. Even worse, All-Star investor Beorn10 tells us DD is "getting better at losing money."

Now, that may be a bit harsh. Fact is, most analysts who track the stock expect to see Developers Diversified post a $0.40-per-share profit for fiscal 2010, then more than double it to $0.99 in 2011. Still, this leaves the stock trading for more than 14 times profits it might earn a year from now. That's not a lot when you consider that the same analysts who are optimistic about DD's prospects in the short term tell us that over the next five years, the company's only likely to grow its profits at about 2% per year.

Time to chime in
This is hardly the kind of performance likely to attract growth investors, or even value investors. And if you're an income investor -- a seeker of dividends -- then I've got bad news for you, too. Belying the common conception of REITs as dividend cash cows, Developers Diversified actually only pays out about 1.1% a year in dividends.

Honestly, folks, the more I look at Developers Diversified, the more I believe our CAPS community is onto something. If there's one stock on today's list that's more likely to decline in value than the others -- Developers Diversified is the one.

But hey, that's just my opinion. If you'd like to cancel it out with a reason or three (or 11, or 12) why Developers Diversified is actually priced fairly, and might even keep rising -- then here's your chance. Click over to Motley Fool CAPS now, and sound off.

Rich Smith does not own shares of any company named above, nor is he short 'em. You can find Rich on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 729 out of more than 170,000 members. The Motley Fool has a disclosure policy.

The Fool owns shares of Annaly Capital Management and Oracle.

Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.