NEW YORK (CNN/Money) - I work for WorldCom and I've been considering buying some of the company's stock as a long-term investment because it seems so cheap now. Do you think this would be a smart move? The stock has to rebound sooner or later, right?

-- Leroy Hamilton, Cary, North Carolina

I'm not in the business of making stock recommendations, or non-recommendations for that matter. So I can't give you a simple thumbs up or thumbs down. But I would suggest that you pull back for a moment and perhaps think a bit differently about what you're considering.

You say that you're a WorldCom employee. That means you've already got an economic stake in this company. Perhaps you also have some WorldCom stock in your 401(k), and maybe part of your net worth consists of employee options on WorldCom shares.

In short, it's possible you already have a lot riding on the fortunes of this one company. If conditions in the telecom world deteriorate or if the company runs into problems that have more to do with its own operations than the industry, you could suffer a double-whammy -- i.e., you could lose your job at the same time that your investment in the company is taking a hit. Obviously, many former employees of Enron are experiencing this right now.

I recommend you think very carefully before putting any more of your economic eggs in the WorldCom basket. If there's one lesson I hope investors have learned from the stock market's two-year slide and the Enron fiasco, it's that diversification is a simple, effective but often overlooked way to reduce risk.

I'd also caution that just because a stock has fallen in price doesn't mean it can't go even lower. In his book One Up On Wall Street, Peter Lynch tells the story of how in the early 70s, after watching Kaiser Industries drop from $25 to $8 a share, he was so certain it couldn't drop any farther that he called his mother and told her to buy it. "Fortunately, my mother didn't listen to me," he wrote. "I watched with horror as Kaiser faded from $7 to $6 to $4 in 1973 -- where it finally proved that it couldn't go much lower."

I'm not saying WorldCom is in for the same slide. But I am saying that just because a stock falls from over $60 a share in 1999 to less than $10 recently, as WorldCom has, it doesn't mean that it can't fall farther, or that a rebound is either imminent or inevitable.

My advice: there are plenty of stocks out there, so I'd be more inclined to think of ways of diversifying rather than adding to the economic stake I already have with my employer. If you decide you want to pursue this purchase anyway, then you at least ought to do some fundamental analysis to be sure the stock is "cheap" in the sense of being undervalued or a bargain as opposed to "cheap" because it simply doesn't merit a higher price.

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There are plenty of places to start that analysis. Plugging a stock's ticker symbol in our Company Research tool, for example, will provide you with a wealth of stats, including earnings estimates and financial strength ratings, plus links to other sites where you can find more info. Similarly, Quicken's Stock Evaluator lets you compare a company with its industry peers in five key areas ranging from growth to intrinsic value.

So, to sum up, I think the more appropriate question isn't what I think of your plan to buy WorldCom stock, but what you think after doing some research and then balancing the risks vs. the potential rewards.