High-Priced Stocks Worth Every Penny

Penny 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.

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

CAPS Rating
(out of 5)

3-Digit Price

Return on Capital, TTM

Alexander's (NYSE: ALX  )

*

$300.00

5.1%

Markel (NYSE: MKL  )

*****

$327.57

5.3%

Netflix (Nasdaq: NFLX  )

**

$126.90

38%

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

But just because these stocks are purring is no reason to jump into them blindly. Catching a tiger by the tail -- or a knife falling from on high -- can end up leaving you scratched and bleeding. That's why we recommend you use this list as a launching pad for your own research and analysis.

Highfalutin honeys
As a kid, shopping at the local Alexander's department store was a neat experience because of the huge glass-and-steel abstract mural, said to be the world's largest mural, affixed to the side of the building. But after the company filed for bankruptcy protection in 1992 and all of its stores closed, the mural was eventually put into storage and pretty much forgotten.

Which could probably describe the Alexander's of today. It emerged from bankruptcy a few years later as a real estate investment trust (REIT) with funding from Vornado Realty Trust (NYSE: VNO  ) , which still manages the company and its properties. While it still owns that property in New Jersey where the iconic mural was, it's now the site of an IKEA with a 40-year lease agreement.

Along with the Paramus, N.J., location, Alexander's manages six other properties in New York. In its most recent quarterly report, funds from operations, a key metric of REIT profitability, rose 18%, and net profits were up 19% on an 8% increase in revenues. Most of its growth, though, was because one of its properties was put into service last year. The risk here is that business news provider Bloomberg accounts for more than one-third of Alexander's revenues.

While the commercial real estate market is in trouble, there are pockets of hope. Mall operator Simon Property Group reported a 56% increase in FFO in the second quarter because average rents per square foot increased marginally.

But that hasn't changed the dour outlook the CAPS community holds for Alexander's, with 70% of those rating it believing it will underperform the broad market averages. Add your opinion on whether this REIT is ripe for a fall on the Alexander's CAPS page.

A masterpiece
Perhaps we shouldn't be surprised to find Markel trading north of $100 because many investors already view it as a miniature version of Berkshire Hathaway. Along with Leucadia National (NYSE: LUK  ) , Markel is one stock you might want to get into before investing in the Warren Buffett vehicle.

Using that proven investing acumen over the years, Markel is now increasing its stake in a number of companies including McDonald's, Anheuser-Busch InBev, and Leucadia. Markel is a specialty insurer, but that's not the only reason it draws comparisons to Berkshire; it's also that it uses its investing prowess to pick out values and increase book value per share at an annualized rate of 21.2% since its IPO in 1986.

Taking wing
Considering its shares are up 200% over the past year, you could say Netflix has the ability to confound the experts and upend the best-laid analyses of Wall Street. And most recently, analysts downgraded the online movie rental giant again, after a long string of downgrades as the stock kept going up and up.

It's easy to think that at some point, Netflix stock has to return to earth, but with Blockbuster almost busted and streaming video becoming a larger component of the service, the opportunity for additional subscriber gains could push the stock even higher. CAPS member doublearon00 likes the proliferation of platforms for watching movies.

Are you kidding me? They have barely tapped into the market. Plus expanding to platforms such as the Wii, the X-box, iphone and ipad can't be bad for business. They have already put traditional video rental stores out to pasture. Only way is up from here.

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 at 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 for stocks with the potential to double, triple, and even quadruple in value over time.

Berkshire Hathaway and Markel are Motley Fool Inside Value selections. Berkshire Hathaway, Leucadia National, and Netflix are Motley Fool Stock Advisor recommendations. The Fool owns shares of Berkshire Hathaway and Markel. Try any of our Foolish newsletter services today, free for 30 days.


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