"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.

Every day, WSJ.com publishes a list of stocks whose shares have just hit new 52-week highs. And every day, investors read the list and tremble -- some with greed, others with terror. In our Motley Fool CAPS investing community, these top stocks usually enjoy favorable ratings, because everyone loves a winner.

But not always ...


52-Week Low

Recent Price

CAPS Rating

(out of 5):

Web.com Group (NASDAQ:WWWW)




Western Digital  (NYSE:WDC)








Goodrich (NYSE:GR)




Grupo Aeroportuario del Pacifico




Companies are selected from the "New Highs & Lows" lists published on WSJ.com on Friday last week. 52-week low and recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

NVIDIA. Western Digital. Goodrich. Like their rivals Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC), Seagate Technology (NYSE:STX), and Goodyear Tire & Rubber, respectively, they're all big names and recognizable consumer brands. Why, some investors may even have heard of the exotically named "Grupo Aeroportuario del Pacifico," now that Motley Fool Hidden Gems has recommended the stock. But have you ever wished you could find a bargain company that no one else has ever heard of, and that Wall Street isn't watching?

Then allow me to introduce you to ...

The bull case for Web.com Group

  • tverkerk5212 spotlighted Web.com as the "Best-in-Class leading provider of [webdesign] and online marketing solutions for SMB" back in the spring of 2007. (SMB means small and medium businesses, by the way.)
  • About a year later, JohnnyiPhone strapped this stock in as a "Member of the 'Undervalued Club' bandwagon."
  • A sentiment with which nittanytom agreed in the summer of 2007, citing the company's "High growth, low PEG."

A very few Fools have noticed the company and been attracted to its low price. Over on Wall Street, practically no one is following this 10-year-old provider of "do-it-for-me" website building tools, Internet marketing, lead generation, and technology solutions. But can you blame them?

After all, Web.com isn't profitable. Its business model is positively plebeian, operating far from the West Coast's software high rollers. There's really nothing sexy at all about this stock, so why bother following it?

Because it's cheap
Web.com, you see, is one of those stocks where what meets the eye is far from the whole story. Take the lack of profits. The company only looks unprofitable because of a large goodwill writedown it took back at the tail end of 2008. Yet Web.com actually generates huge free cash from its business -- $17.5 million in free cash flow over the past 12 months -- and it has been growing its cash profits consistently since first reporting positive free cash flow in 2005.

At today's price, the stock sells for less than 10 times its annual free cash flow -- and is even cheaper than that, once you net out the company's $35.6 million in cash. While a lack of analyst coverage means we don't know how fast this company might grow, it also opens the door to all sorts of upside surprises.

Foolish takeaway
So will Web.com give up its gains and tumble from its current place at the top of a 52-week high? I see absolutely no reason why it must. In fact, at this price, I see every prospect for Web.com surfing even higher.

But hey, that's just my opinion. What's yours? Come on over to Motley Fool CAPS and tell us all about it.

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NVIDIA is a Motley Fool Stock Advisor recommendation and Intel is an Inside Value selection.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he was recently ranked No. 693 out of more than 135,000 members. The Fool has a disclosure policy.