Get Ready for the Fall?

"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 ...

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.

Wake up, Rumpelstiltskin!
Somebody remind me, what year is it? Is gas selling for a buck-fifty, and are companies being valued on "pageviews" and "eyeballs" again? Because this table has me thinking we're back in 1999, with tech stocks and SUVs back in vogue.

Seagate and Microsoft. Hewlett-Packard and Ford. These were some of the hottest names of the late '90s. But if you ask the 145,000-and-growing congregation on CAPS, we're thinking the best stock for 2010 and beyond just might be the humble Goodrich.

The bull case for Goodrich
When you hear Goodrich, you're apt to think of the humble automobile tire. (Indeed, more than one poster on the company's CAPS page has endorsed the company out of a mistaken belief that Goodrich still makes BFGoodrich brand tires.) But as CAPS member Yuen001 pointed out last year: "Goodrich ... is a leading international supplier of aerospace parts to every aspect of the aerospace industry whether it be military, [commercial] or private."

In at least one respect, that's a good business to be in right now. Writing after a string of Airbus-built airplane crashes earlier this year, CAPS All-Star HARTLESS63 observed: "Thales airspeed sensors are failing in Airbus aircraft. Airbus recommends replacing with sensors from N.C. based Goodrich Corp. Spike in sales and longer term increase in perceived quality bode well for [Goodrich]."

So a boost for Goodrich's reputation -- gotta love that -- and the prospect of additional aftermarket sales. Meanwhile, on the profits front, fellow All-Star btthus recommended the stock to us earlier this month on the basis of its having a "low p/e v. industry."

How low, you ask? Well, the aerospace industry as a whole sells for about 14 times trailing earnings. Goodrich, meanwhile, carries a price-to-earnings ratio of just 12.1 --  significantly cheaper than rivals like General Electric (NYSE:GE) with its 14.0 P/E and United Technologies (NYSE:UTX), at 16.6.

There's also the elephant in the room: Boeing's 787 Dreamliner just completed its first successful test flight, and Goodrich is a 787 supplier, bound to profit if the Dreamliner program stays on track. Anticipating this, Wall Street has Goodrich pegged for 11.3% annual profits growth over the next five years, and when viewed in conjunction with the company's respectable 1.7% dividend yield, this suggests that Goodrich is fairly priced today.

Foolish takeaway
"Fairly priced," however, is about the nicest thing I can say about the stock, in that it suggests there's at least some hope the stock can maintain its lofty level. As for whether the stock will rise further ... well, don't bet on it.

Why not? For one thing, I'm not convinced that Boeing can keep to its aggressive schedule for testing, building, and delivering Dreamliners. For another, I've noticed a pattern at Goodrich in recent years (one that continues to this day) in which the company's reported "net income" is pretty consistently much greater than its overall free cash flow generated from business operations.

Time to chime in
None of this leaves me feeling optimistic that additional gains will be found here -- but that's just one Fool's opinion. What's yours?