"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. On our Motley Fool CAPS investing community, these top stocks usually enjoy favorable ratings, since everyone loves a winner.

But not always ...



52-Week Low

Recent Price

CAPS Rating
(out of 5)

Anadarko Petroleum  (NYSE:APC)




Coach (NYSE:COH)




Wyeth  (NYSE:WYE)




Target (NYSE:TGT)




International Business Machines 





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.

Morning in America
My, how time flies. Just a few short months ago, the markets were imploding, with scores of stocks hitting new 52-week lows with each passing day. But the tide seems to have turned; last week, no fewer than 283 NYSE-listed stocks closed out the trading week Friday at their highest prices in a year.

Fools are taking the good news in stride, giving only average, three-star ratings to most of the 52-week winners named above. The exception to this trend is Anadarko Petroleum. Let's find out why CAPS members think this one has further to run as we drill down into ...

The bull case for Anadarko Petroleum
Last month, my fellow Fool David Lee Smith told you about Anadarko's oil strike off Africa's Gold Coast -- a find that could increase the size of the 1.8 billion-barrel field Anadarko already knew to be there. CAPS member wishlist3410 believes this is only the beginning, and that the company will "discover several more huge oil fields [in the region] over the next five years."

Nor is Africa -- or even oil -- the only trick Anadarko has up its sleeve. CAPS All-Star kkconway argued in May that Anadarko "has the cash to exploit some of the one trillion plus cubic feet of gaseous "gold" (natural gas) in the Appalachian foothills. Almost all of West Virginia, and half of Pennsylvania and Ohio are sitting on top of Devonian shale that has gas for many years of high output thanks to new, affordable extraction technology."

And while some might argue that high natural gas inventories will put a lid on its profit potential, fellow All-Star investor bobbyvee begs to differ: "Even with inventories so high, natural gas is a long term winner for the producers. Demand will grow globally faster than in the US."

Now, unlike several of the near-pure-play natural gas companies we've examine in recent weeks -- Quicksilver Resources, Chesapeake Energy (NYSE:CHK), or PetroQuest -- Anadarko's business is much more of a hybrid; the company's hydrocarbon assets break down roughly 60-40 in favor of natural gas. So we're going to value this one in two steps, beginning with ...

At last report, Anadarko's proven reserves of oil totaled 926 million barrels. Valued at their spot price of $73.30 per barrel, that equates to $67.9 billion in asset value for Anadarko's oil assets.

As I've described in past columns, the calculation for valuing natural gas assets is a bit more involved. But basically, what we're looking at for this class of reserves works out to: 8.1 trillion cubic feet of proven reserves times 1,030 BTUs per cubic foot, divided by 1 million, times a spot price of $3.94 per million BTUs, which works out to $32.9 billion in asset value on the natural gas. Combined with the value of Anadarko's oil, therefore, the assets of this company carry a current market value of $100.8 billion. Yet Anadarko itself boasts an enterprise value of just $42.7 billion.

Now admittedly, there's a big difference between oil and gas in the ground and oil and gas already bottled and ready for the breakfast table. (Namely, the latter costs a pretty penny to produce.) Still, the 134% price differential we're seeing at Anadarko today looks mighty intriguing. It wasn't so long ago that oil was trading for twice today's price, and natural gas for more than three times as much. In a Peak Oil world, I think the chances are good that we'll eventually revisit those prices -- making Anadarko an even more attractive buy today.

Time to chime in
Of course, that's just my opinion. And if you hunt around in the oil patch, you're bound to find even bigger bargains. ExxonMobil (NYSE:XOM), for example. Run the same kind of valuation I performed on Anadarko above, and you'll find this $333 billion market-capped monster possesses an apparent $1.1 trillion in assets.

Does this mean Exxon is a better buy than Anadarko? Does it mean these assets aren't worth as much as they seem? Or does it, perhaps, simply mean there are bargains aplenty in the oil patch? Click over to Motley Fool CAPS now, and cast your vote.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.