3 Stocks I Own and Would Happily Buy Today

In the world of free investing articles, rarely do you come across an article pitching stocks that the author has personally backed by cold, hard cash. That's exactly what I offer today: three stocks you will find in my personal brokerage accounts.

Even better, all three of these are stocks I would buy today if I didn't already own them. (They represent between 3% and 8% of my portfolio each, so I hold a healthy allocation of all of them already.)

Also, interestingly, all three stocks are owned and recommended by Motley Fool Million Dollar Portfolio, our real-money investing service.

1. Bridgepoint Education
Bridgepoint Education
(NYSE: BPI  ) is an online, for-profit educator (cue the boos and hisses). Actually, those boos and hisses are just fine with me -- they are the reason Bridgepoint offers such an opportunity today. This entire industry has taken blows from all sides over the past couple of years, with the punches coming from a round-robin of government regulators, short-sellers, and even Congress.

The reasons for the aggression are largely warranted. Across the industry, so-called "guidance counselors" were really salespeople in disguise working commission to sign up new students. Evidence that for-profit education degrees can land graduates higher-paying jobs has been scant. And for-profit students have been loading up on debt to pay for class only to default on their loans after graduation.

But amid the turmoil, some more innocent companies have been grouped in with the incriminated. Bridgepoint is one of those. Yes, its student base has grown more than 17-fold in the past four years, but thanks to more rigorous acceptance standards, its students are less likely to default on their loans than those at competing for-profit schools. Best of all is the valuation -- with no debt and nearly 30% of its market cap in cash, Bridgepoint trades for a scant 2.7 times EBITDA. For a high-margin, debt-free business growing this fast, that's just silly cheap. And that's why I own it.

2. Berkshire Hathaway
Berkshire Hathaway
(NYSE: BRK-A  ) (NYSE: BRK-B  ) needs no introduction. Warren Buffett's (now behemoth) brainchild offers a collection of high-moat businesses whose cash is reinvested by the investor with the greatest track record in our time.

You'd expect Berkshire's shares to trade at a premium, but today's price is far from it. At 1.1 times book value, this is about as low as Berkshire has ever been valued. And now shareholders have a floor on valuation -- Buffett is willing, able, and authorized by Berkshire's board to repurchase its own shares anytime they fall below 1.1 times book. This move means two things. First, Buffett thinks his shares are cheap. Just as important, though, is the second: Buffett thinks that his stock is more attractive today than other stocks. I agree; in my own models, I value Berkshire Hathaway at about $105 per B-share (vs. today's price of around $76).

3. Retail Opportunity Investments
In today's economy, there aren't a ton of jobs. There isn't much stability or consumer confidence. But you know what there is plenty of? Distressed commercial real estate. And that is great news for Stuart Tanz, CEO of Retail Opportunity Investments (Nasdaq: ROIC  ) .

Retail Opportunity Investments Corp. (which shortens to the cleverly devised "ROIC," finance-speak for "return on invested capital") buys up distressed commercial West Coast real estate and turns the properties around. Stuart Tanz has spent a career doing this -- and not just these types of properties, but these exact properties. Since he was a teenager, Tanz has been working the Californian real estate markets. Imagine that you just walked into your favorite retail store and every single thing you wanted was on sale. That's what it feels like to be Stuart Tanz right now.

Armed with intimate property knowledge, stringent investment standards, and an initial $400 million in cash, Tanz has been strategically building up his dream real estate portfolio at prices unimaginable just a couple of years ago. And since ROIC is an REIT, it has to pay out most of its income in dividends. Over the next few years, the income power of Tanz's portfolio will ramp up, pumping out fat dividend checks and likely pushing up the share price. As a shareholder, I get to piggyback on Tanz's expertise and profit from all his work.

Want more ideas backed by real money?
I just laid out three stocks I personally own and would buy today. If you found this refreshing, you're not alone -- the members of Motley Fool Million Dollar Portfolio are all in your camp. Run by former hedge fund star Ron Gross and his team, Million Dollar Portfolio manages a million dollars in real money right before your eyes and even gives members at least 24 hours notice before trades are placed. To read about five stocks Ron currently owns in Million Dollar Portfolio, drop your email address in the box below and we'll send you an entirely free copy of the report.

Alex Pape owns shares of Bridgepoint Education, Berkshire Hathaway, and Retail Opportunity Investments. The Motley Fool owns shares of Bridgepoint Education, Berkshire Hathaway, and Retail Opportunity Investments. Alex thinks that, given the nature of this article, these disclosures should be obvious. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (12) | Recommend This Article (63)

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 21, 2011, at 3:29 PM, Bryand1972 wrote:

    Great article! I also own BPI for similar reasons, in addition to the fact that they are so focused on innovation as it relates to the student experience. I do wish management was a bit more shareholder oriented (The CEO owns a minimal amount of his own stock). Like you said though...at these valuations I don't care!

    In relation to BRK: I am the biggest Buffett fan I know, but I don't own any of his stock. I think BRK is fantastic to own if you are looking for slow, steady growth over time. In fact, even Buffett has said that truly large gains over the S & P 500 are a thing of the past. The size of Berkshire precludes him from getting into little companies like BPI, even though they hold much more potential in the long run because of higher volatility in the short run. This is why if you see Buffett...he is carrying his elephant gun. So unless you're happy with a 10-15% gain over time with Berkshire (and many people would be). Buffett has said that if he were running a small amount of capital, he could compound it at 50% annually. This means that if he had to start over again now, he would not invest in his own company. The reason he is investing back in Berkshire is that HE cannot find companies that will give him higher returns than just buying back his own stock....This doesn't mean that WE can't though, as small investors. I do want to buy at least one share of BRK, though, so that I will be able to attend the next annual shareholder meeting. Anyway, take care and great article!

  • Report this Comment On October 21, 2011, at 5:51 PM, xetn wrote:

    The reason there is so much anti-private education is because the government doesn't like competition.

    After all, every thing the government does is a monopoly, with prices continuing to increase and quality continuing to decrease. Witness the USPS, who even though they are a monopoly on first class mail, have a $10 billion deficit. It seems they will be closing many of their offices and maybe curtailing Saturday mail.

  • Report this Comment On October 21, 2011, at 6:03 PM, MyGoals627 wrote:

    Just so that I'm clear:

    You own ROIC,

    the Fool owns ROIC,

    ...but is short ROIC.

    Is there a reason I should feel nervous about that given this is a ten dollar stock?

  • Report this Comment On October 21, 2011, at 6:49 PM, barakn wrote:

    I think bridges in Brooklyn are an awesome investment opportunity. I'm long on Brooklyn bridges, so you know I'm honest. Why would I lie?

  • Report this Comment On October 21, 2011, at 8:51 PM, beechtree1 wrote:

    By my own very conservative valuations BRK's

    intrinsic value is in the region of around $300,000

    per A share, and a bit more. The calculations are far too involved to start showing here. But if Mr Buffett

    were to nod in agreement, he'd probably smile a non-committal smile that says it all. I have a feeling

    I won't have to wait long to be proved right. After all

    the market is a weighing machine, in the long run.

  • Report this Comment On October 22, 2011, at 4:36 PM, blearynet wrote:

    Uh, the Fool is SHORT ROIC? And you are telling us this is a great investment? Please explain.

  • Report this Comment On October 22, 2011, at 5:44 PM, TMFPapester wrote:

    To clarify, the Fool is NOT short ROIC. It appears our disclosure mechanism had a hiccup because the recent liquidation of one of our Rising Stars portfolios, which included some ROIC stock (link: http://www.fool.com/specials/risingstars/rising-stars-andy-l....

    The Fool owns shares of ROIC, as do I. I'll get the typo fixed.

    Thanks for the catch, Fools.

  • Report this Comment On October 23, 2011, at 11:44 PM, grain wrote:

    I'm curious about the liquidation of the Rising Star portfolio in question. The link provided no longer works. Any information elsewhere about the liquidation?

  • Report this Comment On October 24, 2011, at 12:57 PM, TMFPapester wrote:

    grain,

    The analyst running that Rising Star portfolio changed jobs, so they had to close out his portfolio. Several other services (including the service on which that analyst worked) continue to own ROIC.

    Cheers,

    Alex

  • Report this Comment On October 24, 2011, at 6:41 PM, racchole wrote:

    Grain - remove the closed parentheses * ) * from the end of the URL and the link should work.

  • Report this Comment On October 27, 2011, at 4:31 AM, Doron77 wrote:

    Alex, please elaborate on the risk to EPS dillution that will follow the possible excercise of 49 million warrants outstanding?

    Thanks

  • Report this Comment On October 27, 2011, at 10:26 AM, TMFPapester wrote:

    ^^ For everybody else following along, the above question has to do with 49 million warrants that are outstanding on ROIC's stock.

    Doron,

    The 49.4 million warrants each represent a right to buy the stock at $12 per share. They expire in 2014.

    Don't worry about EPS dilution. Earnings are suspect always, but pretty much meaningless for ROIC. This business is truly all about cash flow (FFO in REIT parlance) and dividends--so look at the dilution in those terms.

    If exercised, the dilution will be just over 100%. Of course, that means that the stock is above $12--and, much more importantly, the exercising of the warrants will bring $593 million of cash into ROIC's bank account. That's all free-and-clear cash (no underwriting costs, etc) for Tanz to deploy. In other words, for ROIC, the warrants offer cheap financing, taking the place of potential debt, preferred equity, or a follow-on stock offering.

    I accounted for the warrants directly in my valuation, and I know definitively that so did Million Dollar Portfolio and the other two Motley Fool services that own the stock. MDP breaks it all out in their trade report.

    Cheers,

    Alex

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