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 Sky One Medical (Nasdaq: CSKI  )

****

71%

SandRidge Energy (NYSE: SD  )

****

53%

Suntech Power (NYSE: STP  )

****

62%

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
You'll want to look a lot closer at China Sky One Medical, a pharmaceutical and medicinal distributor that has been operating under a cloud of financial suspicion. During a Labor Day weekend news dump, it reported losing two key distributors and said its chief financial officer resigned for "health reasons." Revenue ended up dropping 16% in the third quarter as a result of the lost distribution partners, and adjusted profits plummeted 46%.

We've had a disappointing parade of Chinese small-cap stocks playing fast and loose with their financial reporting. While traditional Chinese medicine is growing, there are other players in the space that lack the stigma of fraud allegations. While American Oriental Bioengineering (NYSE: AOB  ) has confused a lot of investors with slapdash acquisitionsquestionable preferred stock offerings, and getting involved in pricey real-estate deals, Tongjitang Chinese Medicines (NYSE: TCM  ) is also trying to create brands from thousand-year-old traditions.

CAPS member omareduardo suggests that China Sky will be able to overcome this rough patch:

A couple rough months and transitions within the company but the products and research is sound and the demand for them will continue to grow. There will be more competition, but I believe the company is in good position to move forward.

If it still seems too dicey yet for a real-money portfolio, add China Sky One Medical to your watchlist.

A reserve player
With oil around $85 a barrel, everyone wants to produce more. Natural gas producer SandRidge Energy moved into the oil patch with its purchase of Arena Resources earlier this year, posting record production numbers there. However, derivative-related losses hurt its own earnings effort.

Like Chesapeake Energy (NYSE: CHK  ) , SandRidge looks cheap if you focus on just its assets and potential. But if you widen the lens to include its large capital needs and heavy debt load, you might come away with a different view.

CAPS member topsecret10, however, insists on investing along the insiders taking a bigger stake in the company:

Stock Is oversold, Insiders are buying,so am I. Stock Is selling at roughly one-third of their enterprise value,oil Is going higher and so Is the stock In the longer term...

Put SandRidge Energy in Fool.com's free portfolio tracker, and have all our news and analysts on the company aggregated for you in one place.

A cloudy outlook
If you're going to tout how much your revenue has risen in the past quarter, you should probably ensure that your sales haven't been built around related-party transactions. Suntech Power suffered the consequences from the revelation that it also paid twice as much for the capacity it bought than it would have cost to build those plants itself. One analyst, Gordon Johnson of Axiom Capital, points out that Suntech is also using rosier predictions of its ability to sell the solar plants than what MEMC Electronic Materials (NYSE: WFR  ) was able to realize in the same market.

Still, CAPS members believe in the company; nuijel thinks management is still credible, and colas1976 believes it still has expansion possibilities:

largest solar panel provider in the world expanding overseas: europe, south america, asia

reducing production costs revenue grew 300M from a year ago alternative energy play

Let us know whether this solar shop will continue to hurt investors on the Suntech Power CAPS page.

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.

Chesapeake Energy is a Motley Fool Inside Value pick. Suntech Power is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors

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.


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