"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 upwards.

Problem is, if the price goes up too much, even a great company can turn into a lousy investment. Below I list a few stocks that may have done just this. Stocks that, according to the smart folks at finviz.com, have more than doubled over the past year, and just might be ripe to fall back to earth.


Recent Price

CAPS Rating

(out of 5):

Taseko Mines (NYSE: TGB)



Atlas Pipeline (NYSE: APL)



Cirrus Logic (Nasdaq: CRUS)



Companies are selected by screening for 100% and higher price appreciation over the last 12 months on finviz.com. Five stars = highest possible CAPS rating; one star = lowest. Current pricing provided by Yahoo! Finance. CAPS ratings from Motley Fool CA PS.

Question: What do mining, gas refining, and semi-conducting have in common? Answer: The companies behind these products are some of the hottest stocks on the Street.

And maybe, rightly so. Shares of semiconductor maker Cirrus Logic have already tripled over the past year -- a run that CAPS members kpacnj believes is just getting started: "As one of the key suppliers to Apple, Cirrus Logic has every incentive to expand, innovate and grow with one of the top consumer brands in the world. It has almost tripled since Feb 5th, mainly on Apple's strong performance."

In comparison, Atlas Pipeline's stock performance pales in comparison at a mere 146% gain, and Taseko Mines only 106%. But don't think that's going to dissuade the stocks' backers. CAPS member Skyshark29 insists that even after its gains, Atlas possesses an "undervalued infrastructure" that's bound to be recognized eventually, leading to further gains in its stock price. And as for Taseko -- it's not just popular; it's actually the most popular stock pick on this week's list of 100%-plus gainers. Want to know why?

So do I. So let's find out, as we examine:

The bull case for Taseko Mines
What's to like about Taseko? CAPS member Sparticus501 sums it up for us in two words: "GOLD and COPPER! Two things everyone is going nuts about. An undervalued cheap stock that should take off for the length of this GOLD rally, then protected by the new surge in Copper. Just over the border in Canada, which makes it a safe investment outside the U.S."

Taseko's also a miner of molybdenum, and as fellow CAPS member medisoft points out: "Molybdenum is used in steel alloys, another metal that is very used in the industry. So a producer of this metals will have a big market now and in the future."

As for where Taseko finds all these shiny rocks lying around, jkeesing informs us: "The revenue growth and EPS from its Gibralter mine is accelerating and is reflected in its low PE, which is much lower than its peers and its stock price will eventually range in the $6-7 area. Should the Prosperity project not be approved, [Taseko] has superb cashflow and no debt, which would propel them in the M&A to acquire other mining companies already in production. Throw in an approval for Prosperity and 3 years from now [Taseko] will be above $12 if not bought out by one of the big miners from China or Austrailia."

M&A -- Can you dig it?
Indeed, just a couple years after the last round of big mining mergers, we really do appear to be in the middle of a new wave of consolidation in the mining industry. BHP is maneuvering to corner the potash market. Goldcorp (NYSE: GG) and Eldorado (NYSE: EGO) are dueling for control of gold in the Andes. Meanwhile, in the U.S., Goldman Sachs just cast its lot with copper and Freeport-McMoRan as the place to be in the metals market.

The chances that a relatively bite-sized morsel such as Taseko will get swallowed up in the feeding frenzy -- and likely, at a tidy premium for today's shareholders -- seem pretty bright. But I cannot help wondering what happens if it doesn't?

Treasure trove at Taseko
I mean, on the one hand, jkeesing's certainly right about Taseko's cheap valuation. Selling for less than 9 times trailing earnings, Taseko looks bargain-priced next to double-digit-P/E-ed rivals Newmont Mining (NYSE: NEM) and Yamana Gold (NYSE: AUY), and even cheaper relative to GoldCorp or Eldorado.

On the other hand, Taseko boasts some 4.9 million troy ounces of proved, recoverable gold reserves. Valued at $6.3 billion at current prices, this gold alone suggests the stock is vastly undervalued at a current market cap of less than $1 billion -- and that's before you even consider Taseko's probable gold reserves, its 2.1 million tons of copper, its molybdenum, or any of its other mineral wealth. Viewed as a stock or an asset play, therefore, it's easy to see Taseko as buy-able today.

Time to chime in
If there's one thing that worries me, though, it's what Taseko's hiding within its "third hand." The fact that, unlike strongly free cash flow-positive players Newmont, Eldorado, and Yamana (and to a lesser extent, the free-cash-even operations at Goldcorp) -- Taseko hasn't generated a penny's worth of annual free cash flow since 2006.

Personally, I'm leery of investing in companies that don't generate cash from their business (seems to me, that's the reason companies are supposed to be in business in the first place). But what I'd really like to know is where you come down on the issue. Does Taseko's cash-poor income statement worry you, or is it the company's asset-rich balance sheet that carries the day?

Click over to Motley Fool CAPS now, and tell us what you think.

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's currently ranked No. 548 out of more than 170,000 members. The Fool has a disclosure policy.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.