"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.

Now 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 upward.

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.


Recent Price

CAPS Rating
(out of 5)

Exelixis (Nasdaq: EXEL)



Flotek Industries (NYSE: FTK)



Riverbed Technology (Nasdaq: RVBD)



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

Question: What does small-molecule cancer research have in common with specialty chemicals used in oil drilling? What do either of these things have to do with network optimization?

The answer is that the companies behind these endeavors boast some of the hottest stocks on the market today. Over the past year, Riverbed shares have shot up a remarkable 135% in value. Flotek's done even better ( a clean quintuple!), while long-standing Motley Fool Rule Breakers biotech recommendation Exelixis has produced a respectable double.

[Pause for applause.]
Congratulations all around. But now that the stocks have taken their bow, it's time to ask the important question: They've all done well over the past year, but which of these companies will excel over the rest of 2011?

According to CAPS member MOTV8, Flotek's "clean" chemicals (said to be used by major oil and gas players such as Halliburton (NYSE: HAL)) are the key to "great growth" for the company. Growth is also key to the bull argument on Riverbed. As CAPS member afamiii points out, "this niche is growing fast as a result of increased working from home and more apps running from the server." Afamiii sees revenues growing 30% per year at Riverbed, and earnings rising perhaps 40% over coming years.

And yet, with Flotek still losing money and Riverbed not much better (its trailing P/E ratio stands is more than 150), most investors seem to agree that at prices like these, the prospects for further price appreciation at Flotek and Riverbed are limited. (Hence the only average, three-star ratings.) But what about four-starred Exelixis?

The bull case for Exelixis
After all, just like Flotek, Exelixis lost money in 2010. And if you ask the analysts who cover it, they see little chance of Exelixis breaking even this year -- or in 2012 for that matter. What makes this particular money-losing enterprise better than any other?

In a word: "XL184." According to CAPS member rpi56, Exelixis' new cancer therapy is "the most promising drug to fight postate cancer metts yet. Need and Mkt. are HUGE at a far lower cost then Provenge." (Which is Dendreon's (Nasdaq: DNDN) rival cancer treatment.)

puffandscruff thinks XL184 could turn into a "blockbuster drug," and he's not the only one. One of the great things about CAPS, you see, is that with 175,000 members (and counting), we often come across investors here who have expert insight into the stocks they're rating. In this regard, you might be interested to hear from CAPS member radoncer: "I treat prostate cancer patients ... phase II trial for androgen independent prostate cancer patients with bone metastasis is amazingly positive ... prostate cancer patients will demand [XL184]."

All of which paints a bright picture for Exelixis' future ... if it can stay solvent long enough to capitalize upon it.

Time to chime in
As I explained last year, this remains an iffy proposition. While a lot of smart Fools think Exelixis will be acquired at a premium, the risk remains that if it doesn't, the company will need to raise cash by taking on debt or diluting its shareholders. And the situation got even worse when Bristol-Myers Squibb (NYSE: BMY) passed on an opportunity to continue co-developing XL184 last year.

Personally, I prefer to limit my investing to companies that can make it on their own -- rather than those dependent upon the "kindness of strangers." For this reason, I won't be investing in Exelixis any time soon -- but that's just me. Maybe you are more of a high-risk, high-reward kind of a Fool? If so, and if you think the potential justifies the risks at Exelixis, here's your chance to tell us why. Click over to Motley Fool CAPS right now, and tell us why you think this stock is worth the risk.