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

Stock

CAPS Rating (5 stars max.)

% Off 52-Week High

Fluor (NYSE: FLR  )

*****

69%

ShengdaTech (Nasdaq: SDTH  )

*****

71%

USEC (NYSE: USU  )

*****

52%

Varian Medical Systems (NYSE: VAR  )

*****

58%

Yingli Green Energy (NYSE: YGE  )

*****

86%

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
Rumor has it the folks running the Large Hadron Collider -- the17-mile long particle beam accelerator buried beneath the Swiss-French Alps -- broke it after the first successful test run and are now contracting with Varian Medical Systems to purchase one of their big, honking cyclotrons typically used to zap cancer to smithereens.

OK, not really, but a medical device that needs its own building when installed could be the stuff of science fiction legend.

As CAPS member Cmoor conjectured in January, though, having the most technologically superior equipment gives Varian a leg up against the competition, but I'm not so certain about being protected from the buffeting winds of recession.

Varian is in the enviable position of having the technologically superior equipment in a business largely immune to recession. People continue to get cancer, and most receive treatment paid by third party payers. Therefore, they choose their hospital based on its reputation as being "the best". Hospital's treatment equipment is largely dictated by doctor's practicing there, and they invariably want the newest and best. Varian's sales and profit show that they continue to increase market share in the radiation treatment equipment and imaging space and that, unlike fears, purchasing of the newest and best equipment by hospitals has not slowed even during the '08 downturn. Order backlog remains high. The company has nearly $400 million in cash, little long term debt, and a history of repurchasing stock to leverage earnings-per-share growth. Analysts project earnings growth of 10-11% the next 4-5 years. Another quarter or two of continued earnings growth will convince the doubters this one has been oversold.

Without question Varian looks like it's on a roll. Revenues rose 13% to $509 million last quarter and net orders rose 13% as well to $551 million. The backlog Cmoor references jumped 14% to $1.9 billion. And its Hadron Collider stand-in, the Proton Therapy System, received CE mark approval in Europe that should allow for greater sales overseas.

Yet unlike the daVinci Surgical System from Intuitive Surgical (Nasdaq: ISRG  ) or the Accuray (Nasdaq: ARAY  ) Cyberknife, the Varian machine has a relatively limited market to sell into if only because of its size. Where its rivals' medical devices might be made available to most surgeons and oncologist relatively easily, there are only a few very large hospitals and treatment centers that can afford, let alone install, the cyclotron.

Varian admits that the worldwide economic downturn last year made it more difficult for its customers to plan future business activities and its international revenue base decline 18% in the first quarter. While that tended to boost margins some because North American sales carry higher margins, a stronger dollar will make its pricing less competitive overseas resulting in slower growth.

Having said that, Varian Medical Systems believes the CE mark is a key milestone in eventually developing a more compact system and the very best cancer treatment centers will want, if not need to have one. There's a market for Varian's proton therapy devices along with its other oncology products, but investors may want to gauge the depth of the recession in deciding whether Varian's growth rates will look like they've been put through a supercollider of their own.

Have half a mind
It pays to start your own research on these stocks on 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.

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

Intuitive Surgical is a Motley Fool Rule Breakers pick. Try any of our Foolish newsletters today, free for 30 days.

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


Read/Post Comments (2) | Recommend This Article (29)

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 March 11, 2009, at 2:15 AM, PauvrePapillon wrote:

    There is a reason why Cmoor has a CAPS member rating of only 33.85 (which means 42,162 out of 65,706 members have a better track record of predicting the market than he does). He doesn’t know what he is talking about.

    Varian does not have the most technologically superior equipment. That distinction would go to Accuray, manufacturer of the CyberKnife. Only the robotically controlled CyberKnife is able to converge multi-planer beams onto both isocentric and non-isocentric treatment patterns and track, detect and correct for patient and tumor movement in real time. Varian manufactures gantry-mounted co-planer radiation sprayers, suitable for old fashion radiotherapy but hardly able to create the optimum treatment patterns necessary for stereotactic radiosurgery.

    As an investment, Accuray has the greater upside as well.

    When the market (correctly) understood that CyberKnife was a truly unique and revolutionary technology, investors bid Accuray’s post-IPO shares up to an intraday high of $31.09 (9 February 2007). As Varian and others made repeated claims, in numerous press releases, interviews and conference calls, that their gantry-mounted machines could do the same thing as the robotically controlled CyberKnife, Accuray’s market cap shrank even though its economic fundamentals actually improved.

    On 6 December 2008, Accuray, finally, fired back with the release of two animated videos that effectively demonstrate what CyberKnife is and why it is fundamentally different from gantry-mounted radiation sprayers.

    You can see them for yourself at http://www.accuray.com.

    Since then, Accuray shares have gone up 11 percent (as of close of market Tuesday 10 March 2009) while Varian’s shares have gone down 27 percent, Intuitive

    Surgical has lost 26 percent and Tomo has shed 28 percent all against the backdrop of a NASDAQ index that has lost 10 percent.

    Investors are indeed taking a second look at Accuray and concluding that they really do have a unique and disruptive technology. This is good news for Accuray shareholders. It’s also good news for patients who may be able to benefit from CyberKnife.

    http://www.cyberknife.com/Forum.aspx

    You might still be able to make some money with Varian or Intuitive Surgical but with Accuray you have a serious candidate for a multi-bagger in the making whose underlying technology is still in the early stages of its adoption curve.

    Peter Lynch would be all over it.

  • Report this Comment On March 11, 2009, at 8:08 PM, dmaster13 wrote:

    I believe the comment on superior technology was meant to refer to the proton therapy equipment, not linacs. And, I would assume it means superior to other proton therapy systems, not as compared to the Cyberknife. Even this statement is debateable since there are other very nice (and even superior) proton therapy systems. Varian taughts the superiority of its superconducting cyclotron vs. competing room temperature cyclotrons. They both do the exact same thing; the Varian machine just has more points of failure and cost more. Next, Varian taughts their pencil beam scanning (PBS) method of treatment vs. the older, yet proven, form of scattering treatment. In fact, Varian has never treated a patient to date yet there are 3 other vendors that are already FDA cleared for PBS (Hitachi, IBA & Optivus) with 2 of them already treating patients with the PBS system (IBA and Hitachi). Further, the IBA system performs both continuous and spot scanning forms of PBS while Varian is only capable of spot scanning which is much more difficult to treat targets with any motion. So I think it is certainly debateable that Varian has the best Proton Therapy system today. The real question is if Varian will stay in the proton therapy market since protons essentially compete with their core business of selling linacs.

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