5 Top Three-Digit Stocks

Recs

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True penny stocks are a minefield, but small-cap copper beauties can be one way to easily double your money.

There are also companies whose shares trade at the other end of the price spectrum. I call 'em "three-digit stocks," though if they're anything like Berkshire Hathaway, they can trade in the four-, five-, and six-digit range, too.

While a penny stock might not be a good buy simply because it's cheap, a three-digit stock shouldn't scare you away just because it carries a hefty price tag. Handsome is as handsome does, so we check in with the Motley Fool CAPS community to see which of these stocks the investor-intelligence database sees as having the best chance of succeeding.

Below are a handful of these high-priced highfliers.

Stock

3-Digit Price

CAPS Rating (out of 5)

Trailing-12-Month Return on Capital

Baidu.com (Nasdaq: BIDU)

$329.48

**

26.0%

CME Group (NYSE: CME)

$271.47

****

5.8%

First Citizens BancShares (Nasdaq: FCNCA)

$135.70

**

NA

Intuitive Surgical (Nasdaq: ISRG)

$221.82

****

16.6%

Isramco (Nasdaq: ISRL)

$166.99

*

(11.2%)

Sources: Motley Fool CAPS and Capital IQ, a division of Standard & Poor's.

Highfalutin honeys
Selling expensive medical equipment to hospitals isn't easy when they're cutting costs. Analysts surveying trends in spending found that three quarters of respondents cut hospital capital budgets by nearly a third for the fiscal year. That's been affecting the results of medical-device companies such as Hansen Medical (Nasdaq: HNSN) and Accuray (Nasdaq: ARAY), both of which missed estimates. But that's not the case at Intuitive Surgical, whose own razor-and-blades business model allowed it to surpass analyst expectations.

The maker of the da Vinci robotic surgical device recorded a 22% jump in second-quarter profits, as revenues rose 19% to $260.6 million, with gross margins expanding 73% from a year ago. Intuitive was able to post these impressive gains in the current environment because the number of procedures performed with the da Vinci system increased by 52%, allowing it to sell greater amounts of accessories. The instruments-and-accessories segment brought a 30% increase in sales. With an installed worldwide base of more than 1,200 devices and hospitals using the devices more often, the Motley Fool Rule Breakers recommendation doesn't appear that it will be operating under the same set of circumstances as its rivals.

Does that make it worth 44 times trailing earnings, though, or even 33 times forward estimates? Highly rated CAPS All-Star greenwave3 isn't so sure: "ISRG looks very overbought right now. This is a great company, but the numbers, even optimistic ones, do not support the valuation."

Yet another All-Star, mango052, thinks the economics of the system for hospitals will continue to drive sales of both devices and accessories.

Even a small Swiss regional hospital recently bought a DaVinci system. The head of the hospital said, there is much economic sense for them to buy the system. They expect to be more efficient and the system allows them to discharge the patients in a shorter amount of time. There is a lot of potential out there and I believe ISRG has by far not reached market saturation. And: every system installed creates a lot of after-sales potential for the service division.

Count to 10
These three-digit stocks might be on their way to even higher valuations. That's why it pays to start your own research in Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page.

Want help finding your own three-digit darlings? Join Fool co-founders David and Tom Gardner at Motley Fool Stock Advisor as they search the market for stocks enjoying not only a triple-digit price tag but also the potential to double, triple, and even quadruple in value over time. Join Stock Advisor free for 30 days and get immediate access to all of David and Tom's proprietary research. There's no obligation to subscribe. Already a subscriber? Log in at the top of this page.

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Baidu and Intuitive Surgical are Motley Fool Rule Breakers selections. Berkshire Hathaway is a Motley Fool Stock Advisor selection. Berkshire Hathaway is a Motley Fool Inside Value recommendation. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey owns shares of Berkshire Hathaway but has no financial position in any of the other stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 10, 2009, at 7:22 PM, ivorybilly wrote:

    Recommend a companion company with your recommended company: examble CME'/ICE

    On the lesser known conmpanies, recommend an

    initial explanation: examble ISRL

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Related Tickers

11/20/2009 4:00 PM
HNSN $2.70 Up +0.05 +1.89%
Hansen Medical, In… CAPS Rating: ****
BIDU $427.59 Down -0.42 -0.10%
Baidu.com, Inc. (A… CAPS Rating: **
FCNCA $153.65 Down -1.60 -1.03%
First Citizens Ban… CAPS Rating: **
CME $322.99 Up +1.02 +0.32%
CME Group, Inc. CAPS Rating: ****
ISRG $276.44 Down -2.24 -0.80%
Intuitive Surgical… CAPS Rating: ****
ISRL $84.95 Up +1.25 +1.49%
Isramco, Inc. CAPS Rating: *
ARAY $5.54 Up +0.13 +2.40%
Accuray, Inc. CAPS Rating: ****

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