"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.

Sometimes, stocks rise for a reason. But sometimes, the rise becomes the reason. However often we caution them not to, investors have a habit of buying "hot" stocks, then trusting momentum to keep them moving upward.

Unfortunately, a too-lofty price can make even a great company a lousy investment. Below, I list a few stocks that may fit that unfortunate bill. According to the smart folks at finviz.com, 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):

ReneSola (NYSE: SOL)



Alcoa (NYSE: AA)



Vale S.A. (Nasdaq: VALE)



U.S. Steel (NYSE: X)



Freeport-McMoRan (NYSE: FCX)



Companies are selected by screening for 100% and higher price appreciation over the last 12 months on finviz.com. Current pricing provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Since the darkest days of early 2009, a change has come over the markets. People are starting to talk more about an economic recovery, and less about the end of civilization as we know it. With the renewed economic optimism, commodities stocks have enjoyed their own kind of renewal, as shares of Alcoa and U.S. Steel, Vale and Freeport, surged.

Much like their peers elsewhere in the markets, CAPS members are eager to own commodity stocks. But they think one company out will do even better as the economy regains steam. Let's shine a light on ...

The bull case for ReneSola
My Foolish colleague TMFKopp introduced us to this little-known solar wafer manufacturer back in June: 

ReneSola [is] ... not focusing primarily on manufacturing solar cells, but rather on making the silicon wafers that companies such as Suntech (NYSE: STP) and JA Solar use to make their solar cells. So instead of trying to build the best mousetrap, ReneSola is providing springs to the mousetrap manufacturers. To me, that makes ReneSola a better pick to capitalize on the potential of solar power overall.

Speaking of potential, CAPS member ak2infinity sees a lot of it in: "the burgeoning solar market in China." One of only a very few countries that can claim to have kept on growing throughout the global recession, China has a vested interest in exploring new forms of energy to keep its economy humming (and its population employed). According to ak2infinity, ReneSola is: "potentially recipients of subsidies from the Chinese government in the near future."

But this is more than just a China story. According to nibs61

[This] Alternate energy stock ... could be in the right place at the right time. The management team seems to be in tune with the direction of the world and they are concerned with growth and profits. They are expected to get back to profits by the next quarter ( June's reporting cycle) and from their I see double digit growth.

Next quarter?
Or sooner. Just two weeks ago, ReneSola seemed very much on the growth path, signing a contract with an unidentified "major global solar company" (rumored to be with BP's (NYSE: BP) Solar International) to provide 200 megawatts of solar modules this year, and a further 400 MW over the next two years. This will be ReneSola's first-ever major OEM solar module contract; to date, the company has confined itself mainly to manufacturing silicon wafers, as mentioned above.

When news of this deal broke, ReneSola stock enjoyed a short burst of investor appeal -- but already, doubts seem to be emerging, and the stock's given back some of its mid-February gains.

Why? I've got a couple of suspicions. I've mentioned already how I feel about the solar industry's cash-burning ways, and its penchant for dilutive stock offerings to keep itself solvent in the absence of cash profits. In short, I just don't find the economics of this business very attractive. ReneSola, I fear, couldn't have picked a worse time to join the ultracompetitive module-manufacturing segment of the solar supply chain.

Foolish takeaway
But the situation may be even worse than that. Many of the CAPS members who've praised ReneSola in the past have done so largely because, as a wafer manufacturer, the firm tried to avoid the cutthroat pricing wars downstream in the silicon supply chain. Instead, it focused on building the "mousetrap springs" that TMFKopp mentioned. Now, ReneSola is hawking its own "mousetraps" to the major solar firms, while trying to convince rival mousetrap manufacturers to buy its "springs." Don't you think this might engender just the tiniest bit of resentment among its new rivals?

I do. And I fear this may make a bad situation -- already replete with burning cash, missing profits, and plentiful stock dilution -- even worse for ReneSola. This company could transform from rocket stock to dud in short order.

That's just my opinion. If you think I'm wrong, don't be shy. Tell me right now why you believe ReneSola is a buy.

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