3 Top Stocks at Half Price

You love buying your shirts when they go on sale. And who can resist a buy-one-get-one-free offer? So when our stocks go on sale, why do we bemoan their low prices?

Smart investors like Warren Buffett or Marty Whitman love it when their stocks are suddenly selling at bargain-basement prices. For them, these companies become no-brainer buys.

The investors in the Motley Fool CAPS community also like a bargain, apparently. Below, you'll find three companies whose shares are selling at least 50% below their 52-week highs, but which still earn high honors from our investor-intelligence database. Consider it a BOGO sale on stocks.

Stock

CAPS Rating (out of 5)

% Off 12-Month High

China Green Agriculture (NYSE: CGA  )

****

54%

Curis (Nasdaq: CRIS  )

****

64%

Fuqi (Nasdaq: FUQI  )

****

85%

Naturally, we want you to look a bit closer at these stocks before buying. You can get low-priced appliances in the dent-and-ding section of your home-remodeling superstore, but their quality might not be so good. Same thing here: Make sure there's nothing seriously wrong with the company before you plug it into your portfolio.

Take two, they're small
Despite a series of disappointing announcements, the CAPS community isn't ready yet to write off biotech Curis. Its lead cancer drug GDC-0449 failed to extend the time it took for colon cancer to progress or the time until death, and the company followed that up with an announcement a few months later that its use in the treatment of ovarian cancer needed more study. It's still awaiting word from its partner Roche on how well GDC-0449 addresses advanced basal cell carcinoma, which should come in the first half of 2011. Without any drugs on the market and only a handful of drug candidates in early stage development, Curis remains a risky investment, though one CAPS is apparently willing to bet on.

Many investors also wonder whether investing in Chinese companies is just as risky, particularly because we've had some spectacular blowups and charges of fraud. It's been noted that China's reporting requirements aren't nearly as transparent as those required by the SEC, but investors might be surprised to learn that sometimes companies even go beyond that into outright falsehoods.

China Green Agriculture, a growing fertilizer producer squaring off against Yongye International (NYSE: YGE  ) and China Agritech (Nasdaq: CAGC  ) for market share in what promises to be a burgeoning industry, admitted today in a release that the numbers Chinese companies report to the State Administration for Industry and Commerce (SAIC) may be outright fabrications.

Arguing that competitors access SAIC filings to gain information on their rivals, China Green Agriculture says the numbers reported to the agency are often deliberately misstated! It says knowledgeable investors would never rely upon SAIC documents for assessing a company's viability. Thanks for the insight there, China Agritech, but it does say that going forward it plans to make sure its own filings with the two agencies are consistent. Investor beware.

A reserve player
Speaking of spectacular blowups, Fuqi International is one of those companies that has been enmeshed in accounting intrigue, and it has nothing to do with whether its numbers between the SEC and the SAIC were fudged.

Earlier this year, the Chinese jewelry seller said accounting errors related to its original design manufacturing (ODM) contracts -- contracts where customers for its jewelry provide the raw materials used in the manufacture of the designs -- caused it to underestimate its cost of sales. With costs consisting primarily of raw material costs, such as gold, platinum, and diamonds, the ODM revenues soared almost 500%, allowing its cost of sales to appear to grow at a slower rate. With the problem identified, the company needed to restate profits for the first nine months of 2009. That's nice, but it hasn't filed any financial statements since last year's third quarter.

As a result, you can't look at its valuation as a point of reference between it and other jewelry retailers like Blue Nile (Nasdaq: NILE  ) . While Tiffany (NYSE: TIF  ) may sport a multiple five times larger, it's at least based on recently released numbers.

Not only has that prompted the usual Nasdaq listing notice, but now the SEC is launching a formal investigation, too. You can't just continue to do business as usual without filing the requisite paperwork and expect no one to notice. The short-sellers have, that's for sure, and CAPS member berrygeorge thinks it's unlikely Fuqi will be able to make the new filing deadlines, which would provide new fodder for the short-sellers.

Do you thing that Fuqi will come out with some figures on September 28th, 2010 like they are [supposed] to. ? I would like to buy into this stock but perhaps I should wait. I think it'll drop 20 percent if they miss their latest SEC deadline. Then I'll buy in for real after that.What do you think ? Yes or no to the deadline ? I think over the long haul it is a good investment so was unsure as to put "under perform." Let me hear from some of you. Thanks.

So let's tell berrygeorge on the Fuqi International CAPS page what's in store. Does it grab the brass ring or will it forever be tarnished as a numbers-fudging operator?

Have half a mind
Sign up today for the completely free CAPS service, and tell us whether these stocks are twice as good at half the price.

Blue Nile is a Motley Fool Rule Breakers choice. China Green Agriculture is a Motley Fool Global Gains selection. The Fool owns shares of China Green Agriculture. Try any of our Foolish newsletter services free for 30 days

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (13)

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 September 13, 2010, at 2:02 PM, dargus wrote:

    "Arguing that competitors access SAIC filings to gain information on their rivals, China Green Agriculture says the numbers reported to the agency are often deliberately misstated! It says knowledgeable investors would never rely upon SAIC documents for assessing a company's viability. Thanks for the insight there, China Agritech, but it does say that going forward it plans to make sure its own filings with the two agencies are consistent. Investor beware."

    Who said this? First you say CGA, but then later you admonish China Agritech.

  • Report this Comment On September 14, 2010, at 12:27 PM, ckkg wrote:

    Check out CGA's press release today or yesterday. CGA's press release said that. What CGA states is known to whoever who has a little knowledge of China. SAIC is a place you go to keep your company registered, not a place to report your tax. Whatever number you put down, they usually do not care. The Tax authority is the place to pay fax and file your tax return.

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