5 Stocks That Just Won't Quit

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 we call 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 immune to gravity, steadily riding 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:

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

"Everybody loves a winner"
So they tell me, but to be honest, Fools, I'm not seeing a lot of love in the table up above. To the contrary, the higher these stocks soar sunwards, the more investors expect to see their wings scorched. Sure, two of the companies get at least a half-hearted, three-star rating on CAPS.

But can either one overcome the skeptics and extend its winning streak into a sixth year? Perhaps. After all, one of these companies already bears the Fool seal of approval -- Motley Fool Rule Breakers tapped Check Point Software to join the portfolio in its May issue. But it's the other three-star stock that has me feeling most optimistic. I'll tell you why in a moment; first, let's let the CAPS community lay out ...

The bull case for DirecTV
Writing back in April, CAPS member Turbo91 spotlighted DirecTV for its "[l]ow P/E and price/cash flow than average industry. Lower capital investments than industry because their infra is "shoot it up to the sky and rake in the bucks" (e.g. they are not pulling wire). They will get increased competition from FIOS, but their HD lineup is better ..."

Last year, ryanassist suggested that "[a]s the economy slows people are going to turning to more home entertainment options. Instead of going to the movies and dropping $30-$40 they will get a pay per view for $3. Instead of going to 1 football game and dropping $300 plus, they will get the NFL package and watch the entire season, invite some friends over and have a BBQ."

And so far, that seems to be the way things are playing out. As CAPS All-Star antonioexpo wrote last month, this "company is spitting cash flow like crazy and using it to buy back stock."

Think antonioexpo is exaggerating? Think again -- and read fellow Fool Anders Bylund's write-up on DirecTV's most recent quarter. DirecTV boasts 18.4 million total subscribers now signed up, and signing over monthly subscription checks. Its free cash flow totaled a monster $1.65 billion over the first three quarters of this year, and looks destined to crest $2.2 billion by year's end.

Foolish takeaway
What does this mean to investors? Well, if you look at the most basic numbers, DirecTV sells for a 21 P/E, making it look a whole lot more expensive than rival telecoms like Verizon (NYSE:VZ), AT&T (NYSE:T), or Comcast (NASDAQ:CMCSA). But here's the thing: DirecTV is projected to grow at 23% per year over the next half-decade, more than twice as quick as any of those three other names.

Now look even closer, and you'll see that the company generates a whole heckuvalot more free cash flow than it gets to report as "net earnings" under GAAP. Value DirecTV on its presumed $2.2 billion in free cash flow this year, and the stock turns out to be bargain-priced at just 12.5 times free cash. More simply put, if DirecTV comes anywhere near the growth rate Wall Street has laid out for it, this stock is a steal, even at its five-year-high.

Time to chime in
Of course, that's just my opinion ... and what do I know? I've got Comcast. Perhaps there are "issues" surrounding DirecTV that upset the buy thesis I've laid out above. If you know of any, here's your chance to set me straight.

Click over to Motley Fool CAPS now, and fire away.