"Don't catch a falling knife," sayeth the sage. The idea of buying a former superstar stock at a discount price certainly has its attractions, but you've got to make sure you catch the haft -- not the blade.

For the second time today, we're upending Mr. Market's kitchen drawers and watching the knives tumble. We've already sifted through the silverware on the NYSE. Now it's time to take a stab (pardon the pun) at bargain hunting on the Naz. As always, our guides in this endeavor are twain -- we start with the latest "New 52-Week Lows" list at WSJ.com, then crunch the investor-sentiment numbers at Motley Fool CAPS:


52-Week High

Recent Price

CAPS Rating

(5 max):

Corporate Executive Board  (NASDAQ:EXBD)




American Railcar Industries  (NASDAQ:ARII)








Fifth Third Bancorp  (NASDAQ:FITB)




Overstock.com  (NASDAQ:OSTK)




Companies are selected from the "New 52-Week Lows" list published on WSJ.com on the Saturday following close of trading last week. 52-week high and recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Knives and knaves
Two-hundred-ninety NYSE-listed stocks closed out the trading week Friday at their lowest prices in a year. Likewise on the Nasdaq, where nearly one stock in eight -- 377 stocks in all -- hit rock bottom on Friday.

With so much bad news, you can be forgiven for thinking the sky really is falling. Me, I've got a different point of view: I think we're in a turkey shoot. And while you might not want to buy every turkey in the above list, at least one of 'em looks more fair than fowl: Corporate Executive Board (CEB).

This bona fide Foolish Motley Fool Stock Advisor recommendation was supposed to withstand the downturn by providing invaluable advice to the corporate executives trying to navigate the downturn. Instead, CEB's getting sucked in just like everybody else. Can it bounce back? Our CAPS community gives it four stars and believes it can. Here's why:

The bull case for Corporate Executive Board

  • Back in August, FAOFool noticed that: "[Corporate Executive Board] has been punished lately" and pronounced the punishment "overdone. They just declared a dividend: a positive sign for me that management is doing the right things. They are still bringing in more cash than most of their competitiors (a tribute to a loyal customer base), they have a proven track record (5-yr growth record of ~22%), and they have a respectable 13.7% profit margin. They are now trading at a low (especially when compared against competitors) 18.48x P/E. This company will outperform the market over the next few years."
  • CAPS All-Star investor Grinnell4Eva wrote in early June that: "This company has a virtual monoply on Fortune 500 business consulting services. ... [Corporate Executive Board] promises to add additional services to those currently available to their enviable client base, and look for substantial growth abroad ..."
  • Late last year, Slappster called the company: "Ridiculously profitable. Business model is amazing - requires very little capital investment to grow, and almost every dollar of earnings growth falls through to free cash... allowing them to continue funding share buybacks and dividend hikes. Plus, they have no direct competitor and in the meantime have already locked up 80% of the Fortune 500. That's a moat, folks.

I think you'll agree that a lack of competition is a good thing. Why share superstar clients like Monsanto (NYSE:MON) and Dow Chemical (NYSE:DOW) if you don't have to?

Lack of significant competition also helps explain CEB's superb numbers. Since FAOFool wrote, they've dipped only a bit, with net profit margins now coming in at 13.4%, and five-year profits growth at 19.1%. The value proposition, meanwhile, has gotten a whole lot better. No longer does CEB trade upward of an 18P/E. Today, you can own the stock for just half that -- nine times earnings, which is not too shabby for a predicted 12% grower.

Time to chime in
If there's one thing I don'tlike about CEB, it's the fact that for three years running, its free cash flow has been on the decline -- and currently amounts to less than two-thirds of what management reports as its "net earnings" under GAAP. But if management can find some way to reverse this trend, then yes, I do believe we've got a potential bouncer on our hands here.

Care to lay odds on whether Corporate Executive Board will live up to its name, and show some executive leadership in curing its ills? Click on over to Motley Fool CAPS and tell us what you think.

Motley Fool CAPS : It's fun; it's free; it's downright fantastic.

Corporate Executive Board is a recommendation of Motley Fool Hidden Gems Pay Dirt, Inside Value, and Stock Advisor. Dow Chemical is a Motley Fool Income Investor selection. Try any of our Foolish newsletters today, free for 30 days. We'll show you why hiding from the market is a mistake.

Fool contributor Rich Smith does not own shares of any company named above. Find him on CAPS, pontificating under the handle TMFDitty, where he's currently ranked No. 798 out of more than 120,000 players. The Fool has a disclosure policy.