Small-cap stocks can be one way to easily double your money, but there are equally shiny opportunities trading at the other end of the price spectrum, too. 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.
A penny stock might not be a good buy simply because it's cheap, and a three-digit stock shouldn't scare you away just because it carries a hefty price tag. Handsome is as handsome does. Let's check in with the Motley Fool CAPS community to see which of the high-priced stocks below earn the greatest confidence from our investor-intelligence database:
|
Stock
|
3-Digit Price
|
CAPS Rating
|
Return on Capital, TTM
|
|
Westpac Banking (NYSE: WBK )
|
$110.89
|
**
|
N/A
|
|
NewMarket (NYSE: NEU )
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$109.21
|
****
|
23.5%
|
|
Core Laboratories (NYSE: CLB )
|
$105.74
|
*****
|
27.4%
|
Source: CAPS and Capital IQ, a division of Standard & Poor's.
Highfalutin' honeys
They wanted you to think that subprime mortgage securitization was innovation, but even banking giants like Citigroup (NYSE: C ) didn't fully understand the exotica they were peddling. More conservatively run institutions like Wells Fargo (NYSE: WFC ) and JPMorgan Chase (NYSE: JPM ) largely stayed away from most of the complex and arcane issues, and thus survived the meltdown that crippled an entire industry.
Many European financial institutions also bought into the mess, taking serious hits when the housing crisis blew up. But down under in Australia, they pretty much avoided the scandal altogether. Thanks to Australia's rather comprehensive regulatory structure, banks like Westpac Banking were able to focus on maintaining their base and tending to their profits, rather than wrecking their balance sheets. Although net earnings are down year over year at several Australian banks, Aussie institutions are generally looking forward to an improving situation in the year ahead.
With a sound foundation, CAPS member TrojanFan is willing to bet the Australian economy recovers long before our own does, making Westpac an interesting investment:
This is a long-term macro call on the Australian economy and AUD vs. USD.
Both the appreciation and dividend stream are levered to dollar weakness so persistent dollar weakness should be good for this stock and I expect the huge raw material driven trade surpluses with China to support the Aussie economy for years to come.
A slick opportunity
Call it prescient timing. Last year, as raw material costs spiraled upwards, specialty chemicals maker NewMarket raised its prices, passing along those expenses to its customers. That was just in time to see raw material costs fall, leaving the company generating huge profits this time around. The third quarter saw the motor-oil-additives firm triple profits from the year-ago period.
Those higher prices undoubtedly exacted a cost, though, as sales fell 5%. We'll see whether NewMarket can maintain its margins if drivers start racking up mileage again. The company ranks fourth in engine-oil additive market share, behind industry leader Lubrizol (NYSE: LZ ) , but CAPS member donsguesswork sees its past performance bolstering NewMarket's future prospects: "[NewMarket’s] second qtr. eps of $2.50 surpassed last years by 2x, surpassing analysts estimates by 57%. Estimates climbed to $8.64 for 2010."
Finding its way
Netherlands-based oil services firm Core Labs felt the impact from the weakened state of North American operations, as drilling activity essentially remained moribund. Still it was able to turn in better-than-expected results last quarter thanks to cost reductions in its reservoir management segment, which also has greater international exposure. Large-scale analyses in the Middle East, West Africa, and Brazil, for example, remain key ongoing projects.
The CAPS community remains bullish on Core's prospects; 98% of the members rating the oil services specialist believe it will outperform the market, helping Core maintain a top five-star rating. All-Star members are similarly impressed with its performance, and Wall Street remains unanimous in its outlook.
Head over to Core Laboratories' CAPS page and map out your own position on this top-rated stock.
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 with the potential to double, triple, and even quadruple in value over time.
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