3 Top Stocks With Room to Run

Few investors would argue it's not a fantastic feeling to watch the value of their portfolios rise. However, as your percentage gains increase, all too often your blood pressure follows suit. As a result, it can be incredibly tempting to sell your top stocks to lock in those gains before something goes awry.

As the saying goes, "You can't go broke by taking a profit," right?

Unfortunately, my fellow Fool Matt Koppenheffer reminded us last year that adage often hurts returns more than it helps, and you should never sell a stock simply because its price has gone up.

With that in mind, here are three top stocks that I'm convinced have room to run even higher:

Company 6-Month Return % Below 52-Week High Recent Price CAPS Rating
(out of five)
Boston Beer (NYSE: SAM  ) 32.9%  12.4% $150.65 ***
Chipotle Mexican Grill (NYSE: CMG  ) 29.1%  13.9% $361.15 ***
Stratasys (NASDAQ: SSYS  ) 28.9%   10% $83.10 ****

Source: Motley Fool CAPS.

Profits with integrity
Chipotle Mexican Grill stock, top stocks 

Image source: Chipotle.

First up, Chipotle Mexican Grill has proven a strong performer of late, with shares up more than 29% over the past six months. Zoom out a little further, however, and you'll see this top stock still sits almost 14% below its 52-week high set last June.

So why shouldn't you sell Chipotle now, especially after it popped more than 10% in a single day following its strong first-quarter results last month?

Luckily for long-term investors, Chipotle's margins are improving as the company focuses on streamlining operations to offset increasing food costs. In addition, management reiterated they're confident they can deliver at the high end of their existing guidance for new restaurant openings of between 165 and 180 in 2013.

Chipotle is also focusing on opening smaller restaurants for the time being, which offer lower development occupancy and operating costs and should serve to improve margins that much more. Combine that with strong returns on capital of 22% and $700 million in cash on their balance sheet with no debt, and it's safe to say Chipotle has positioned itself for success going forward.

A world-changing industry
Stratasys stock, top stocks

Image source: Stratasys.

Next, I think Stratasys is another top stock with room to run as it sits around 10% below its 52-week high. Like Chipotle, Stratasys is currently riding a wave of optimism after the company turned in strong results with its most recent quarterly earnings report.

However, those most recent numbers were reported in March, and Stratasys has yet to report its first quarter of 2013. Keep in mind, however, that other competitors in the space have posted strong results so far, including 3D Systems and newcomer ExOne, so we know the additive manufacturing industry as a whole continues to grow like a weed.

In addition to perennial concerns for how organic growth is holding up, then, Stratasys investors will also be eager to see how the company is benefiting from its recent merger with fellow 3-D printing behemoth Objet.

Remember, because the merger only officially closed in the middle of Q4, the most recent quarterly net sales of $71.2 million represented a full quarter from Stratasys combined with a partial quarter from Objet. When the company reports next Monday, it will be the first full quarter for which both companies' results are compiled.

Finally, it'll also be interesting to see how well Stratasys has been able to leverage its new global network of more than 260 resellers and independent sales agents inherited from the merger.

Crafting long-term gains
Boston Beer stock, Samuel Adams Logo, top stocks

Image source: Boston Beer.

Last but not least, while shares of Boston Beer have performed exceptionally well for investors over the past six months, this top stock is actually reeling from a difficult quarter, during which the company saw net income fall 8% year over year in spite of a 20% increase in total sales.

Even so, I'm not alone in viewing this pullback as a perfect buying opportunity for patient investors with a long-term mind-set. After all, the company was primarily hit by the high cost of goods and "slight softness" in its Samuel Adams Spring seasonal selection last quarter, and they're wasting no time moving onto the wildly popular Summer offerings. What's more, Boston Beer's wares will soon be available in an innovative new can, which should serve to boost sales further while preserving the taste of the craft brews that made the company famous.

In the end, I'm convinced Boston Beer's reputation for high-quality beer should eventually supersede this short-term weakness, and its stock price should continue to follow suit.

If you'd like to learn more about the Sam Adams maker, we've compiled a premium research report filled with everything you need to know about the company's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.


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