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.

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.

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