"Don't catch a falling knife," as the old saw commands. (Pardon my mixing a cutlery metaphor.) 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. That's where Motley Fool CAPS comes in.

Today, we once again stand beneath Mr. Market's silverware drawer, measuring which knives have fallen furthest. Then we'll call on CAPS to ask which of these stocks -- if any -- Foolish investors believe are ready for a rebound. Let's meet today's list of contenders, drawn from the latest "52-Week Lows" list at WSJ.com:


52-Week High

Recent Price

CAPS Rating

(5 max):

Mettler-Toledo International (NYSE:MTD)




Allis-Chalmers Energy (NYSE:ALY)




Evergreen Solar  (NASDAQ:ESLR)




American International Group (NYSE:AIG)








Companies are selected from the "New Highs & 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
If there's one good thing about a broad-based market sell-off, it's that you find a lot of terrific companies getting the ol' baby 'n' bathwater treatment. Tossed out on their rosy little bums as if they were bums of another sort. You know -- just know -- that some of these babies are gonna bounce right back once the suds subside.

While opinions are mixed on some of these stocks, Fools feel inclined to salvage two toddlers from the suds this week. Top marks go to industrial and laboratory equipment maker Mettler-Toledo, so let's focus on that one. Without further ado, here's ...

The bull case for Mettler-Toledo International

  • The Fool's own TMFHelical, one of CAPS' All-Stars, introduced us to Mettler last summer: "Mettler-Toledo is a solid biotechnology instrument maker. ... Profitability metrics ROA and ROE have both shown improvement over the past 3 years. I wish this was a bit cheaper, but over the long term it should deliver from here." Thanks to last week's sell-off, TMFHelical's wish has been granted, and the stock's now 8% cheaper than when he picked it.
  • If today's lower price makes TMFHelical happy, then CAPS member tom42A should be even more pleased. This investor praised Mettler in November for its: "Steady top and bottom line growth over the last decade. Strong position in its markt of precision weighing and measurement equipment. Storngly grwoing in Asian markets, and defending its already dominant position in Europe and North America well."
  • Last but not least All-Star BfloBull chimed in pre-earnings with a few bullish numbers: "LT EPS Growth: 12.25% ... PEG Ratio: .95 ... Positive EPS Surp: 7+ Qtrs."

Actually, make that eight straight quarters of positive earnings surprises, because Mettler hit nothing but net last week, reporting $2 per share in profits (excluding one-time charges) when the Street had been expecting only $1.89. Investors seem to have been scared off, however, by Mettler's prediction of declining sales and profits in the current quarter -- but are they overreacting?

They just might be. Based on the numbers reported last week, Mettler is selling for just 11 times its trailing earnings, and 13 times trailing free cash flow. These profits hail from an exceedingly diversified client base, with customers as varied as Schering-Plough (NYSE:SGP), Rockwell Automation (NYSE:ROK), and Coca-Cola (NYSE:KO). And analysts expect Mettler's profits to grow faster than the rest of the scientific instruments industry, posting 13% annual gains over the next five years. The way I look at it, the stock sells for a price that's fair if it performs only as expected.

Which brings us to the most important part: As BfloBull pointed out, Mettler has a history of out-performing analyst estimates. A history that goes back not just seven quarters, not eight, but ... 22 straight quarters. That's five and a half years of outperformance, folks. And it suggests to me that whatever the analysts expect Mettler to do in the future, they're undershooting what will actually happen by a sizable margin.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Mettler-Toledo International -- or even what other CAPS players are saying. We really want to hear your thoughts. Click on over to Motley Fool CAPS and tell us what you think. The soapbox is free.

Fool contributor Rich Smith does not own shares of any company named above. Coca-Cola is a Motley Fool Inside Value pick. You can find Rich on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 554 out of more than 125,000 members. The Fool has a disclosure policy.