In my weekly Fool column "Get Ready for the Fall," I run Nasdaq.com's 52-week highs list through the "wisdom of crowds" meter at Motley Fool CAPS. The result: a list of stocks that have flown so high, investors are starting to get nervous about that whole "gravity" thing. But while many stocks will indeed plunge back to Earth, some seem to steadily ride a rising megatrend to ever-greater heights.

Today, we'll move beyond stocks that have hit 52-week highs, and identify companies now surpassing five solid years of outperformance. Which of these will thrash the market averages for another half-decade? Here are this week's leading contenders:

Company

Recent Price

CAPS Rating (5 stars max.)

Bull Factor

TeleCommunication Systems  (NASDAQ:TSYS)

$9.21

****

96%

Brinks Home Security  (NYSE:CFL)

$24.15

*****

96%

Odyssey Re

$53.95

***

86%

SAVVIS

$6.86

**

83%

Pegasystems

$15.07

**

83%

Companies are selected from the "New 5-Year Lows" list published on MSN Money on Thursday. CAPS ratings from Motley Fool CAPS.

Everybody loves a winner
Well, almost everybody. Of the five stocks hitting five-year highs on today's list, three have at least an average three-star ratings from CAPS members. How do we decide which one to profile today? Well, Odyssey Re has the least support, and it's already a subsidiary of three-star-rated Fairfax Financial, so we can rule out that one. Brinks Home Security, maybe? It's been truly "public" less than six months, having spun off from Brinks only in October. That leaves us with...

The bull case for TeleCommunication Systems (TCS)
CometKidd tells us that TCS has: "Good products, recent new contract and sound chart, with little upside resistance makes this one attractive to me."

EPS100Momentum muses: "I can't understand why people love texting? But [TCS] seems to know something about it since they are ready to break records in text again." Citing a press release, EPS100Momentum tells us that: "TCS is one of six primary vendors on a $5 billion Army Worldwide Satellite Systems Contract vehicle." (Other participants include giants Boeing (NYSE:BA) and General Dynamics (NYSE:GD).)

newstead likes TCS's sphere of business, too. In September, this investor noted: "Good technology being sold to Govt.... Good takeover candidate for a larger defense contractor looking for expertise in the secure network arena." Firms like Lockheed Martin (NYSE:LMT), L-3 Communications (NYSE:LLL), and Alcatel-Lucent (NYSE:ALA) could be potential acquirers here, since all three do contract work for the military in this field.

On the face of it, you can see why a larger firm might find TCS a tasty acquisition target. The stock trades for a 7.5 P/E, yet analysts expect these earnings to grow at 14% per year over the next five years. But don't click that "buy" button yet. The story here is both worse than it looks at first glance ... and better.

The bad news...
TCS earns its ultra-low P/E by virtue of a massive tax benefit recorded in the fourth quarter of this year, which grossly inflated earnings. According to the most recent earnings release: "For the full year, net income was $57.6 million or $1.23 per diluted share, which includes the positive effect of $0.71 tax accounting benefit."

Back out the tax benefit, and TCS earned only $0.52 per share -- raising its P/E to something more like 18.

...and the good
But while there's an argument to be made that TCS is not as cheap as it seems, there's also evidence that it might be cheap enough. The company hasn't released a cash flow statement for last year just yet, but if you tally up the free cash flow earned over the last four quarters for which we do have cash flow statements, you'll find TCS generated $28.2 million -- against less than $22 million in net income.

Time to chime in
Personally, I think free cash flow trumps its accounting cousin. And so the way I see it, TCS is selling for an entirely defensible valuation -- 14 times free cash flow, 14% projected long-term growth. But hey, folks, this is the Fool. Feel free to disagree. Just click on over to our dedicated CAPS page for TeleCommunication Systems and tell us why you do, or do not, think this stock's a winner.

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Fool contributor Rich Smith owns shares of Boeing. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 506 out of more than 125,000 members. The Motley Fool has a disclosure policy.