5 Stocks That Just Won't Quit

"The bigger they are, the harder they fall. It's the worst nightmare of every investor in today's market -- buying a hot stock just before it takes a nosedive."

So goes the thesis of my weekly Fool.com column "Get Ready for the Fall." Therein, I run the 52-week highs compiled on Nasdaq.com through the "wisdom of crowds" meter that we call Motley Fool CAPS. And out the other end comes a list of stocks that have flown so high, investors are starting to get nervous about this "gravity" thing.

But it's an undeniable -- and often glorious -- fact of investing life that some stocks seem immune to gravity. After rising for one year, they fail to fall back to Earth. Instead, they soar for a second year, and then a third. By year four, you're beginning to wonder whether you've stumbled upon a megatrend, and by year five, you're certain of it.

And so it is that today we're going to take our next logical step. Moving on from stocks that have hit 52-week highs, we'll identify for you the companies that are entering their second half-decade of outperformance. Which of these will go on to thrash the market averages for another five years? Here are this week's leading contenders:

Everybody loves a winner
Spotting a megatrend in the making is tricky, but once the trend's become firmly established, it's a piece of cake. Need a hint? Every stock in the list above sits squarely in the middle of the coal industry -- why, three have the word right in their names -- and four of the five receive above-average ratings from CAPS players.

Top marks in this group, though, go to Peabody Energy, which equals Fording's four-star CAPS rating, and also boasts the highest percentage of bulls in its camp. Here's why investors love it:

The bull case for Peabody Energy

• CAPS All-Star stanton17 introduces us to the company: "Both Peabody Energy (BTU) and Arch Coal (ACI) have extensive fields in the coal rich Powder River Basin. Morningstar mentions that the PRB contains some of the easiest-to-mine coal in the world ... Moreover, PRB coals contain very little sulfur, which causes acid rain, making them even more attractive to utilities trying to meet strict emission standards. If push comes to shove, America will take the easy road for short to long-term self-sustaining energy and that means instant gratification through coal."
• According to zgreenwell: "It will take longer than five years for any power concerns to be addressed by new nuclear plants. Coal will continue to be our main source of electricity for quite a while now." Actually, zgreenwell is probably being optimistic. In a column last year discussing renewed interest in nuclear among firms like GE (NYSE: GE), Southern Company (NYSE: SO), and Exelon (NYSE: EXC), I noted a Congressional Research Service estimate saying that it will take 15 years from the time an application to build a new nuke plant is submitted, to the moment the resulting plant comes online.
• In the meantime, CAPS All-Star DarkToast believes, "Exported coal is going to continue to be strong in the medium term. While the projected increased demand in the U.S. hasn't really panned out, developing nations such as China are growing their imports at an exponential clip. If some of the alternative uses of coal, like gasification, catch on this trend will only be exacerbated."

Aside from their exuberance about coal, though, the latter two pitches differ from the first in that they fail to describe: Why buy Peabody in particular? Let's flesh that bull thesis out some:

Peabody assures us that it has 9.3 billion tons of proven and probable coal reserves in its kitty. Now, the current spot price on PRB coal is about $13 and change. If you divide Peabody's market cap by its reserves, I think you'll find you can buy this company -- and its coal -- for the miserly sum of just more than $2.40 per ton. Meanwhile, Arch Coal -- which stanton17 informs us is a close competitor and similar miner of PRB coal -- sells for the equivalent of $3.65 or so per ton of proven and probable reserves. Seems to me, that's a fine argument in favor of owning Peabody.

So yeah, I realize the company's P/E is a bit of a nosebleed. It's sufficiently high that I personally won't be buying Peabody any time soon. What's important to remember, though, is that just as there are arguments for why this stock is "too expensive," there are also reasons to say it's "cheap" -- and could go higher.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Peabody Energy -- or even what other CAPS players are saying. We want to hear your thoughts. Head on over to Motley Fool CAPS, and tell us what you think.

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