You'll usually find me sitting in the cheap seats.
Every month, I identify five promising stocks that happen to be trading in the single digits. You may have even read last week's column.
I shouldn't limit myself to picking out equities trading for less than $10. Now that many market darlings are forgoing stock splits, it may be time to see how the other half lives.
A quick Yahoo! Finance stock screen shows 59 stocks trading for at least $100 a share. Let's go over five companies that I see going even higher.
Few things are cooler than the da Vinci Surgical System. Intuitive Surgical's operating-table breakthrough is a robotic arm that's being used in more and more prostate and hysterectomy procedures.
Everyone wins. Surgeons love it because they're less fatigued. Hospitals love it because it allows for quicker turnover on the table. Patients love it because more precise incisions lead to quicker recovery times (which insurance companies happen to love, too).
Intuitive Surgical is rocking. Earnings soared 54% in its latest quarter, and this is during a recessionary time when many hospitals have had to scale back on expenditures. Just imagine what Intuitive Surgical can do when hospitals can open their billfolds wider.
For-profit post-secondary education has been a recession-bucking sector. Working adults seeking to retool their resumes have provided a steady enrollment flow at Strayer University.
It ended 2009 in fine fashion. Revenue climbed by 29% to $512 million for all of last year. Earnings soared 30% to $105.1 million -- or $7.60 a share.
If you want a drool-worthy calculator trick, divide $105.1 million into $512 million. That 0.205 result translates into Strayer's 20.5% net margins for 2009. In other words, a little more than $0.20 from every dollar in revenue makes it all the way to the bottom line.
Strayer may have initially spooked investors by posting lackluster guidance for the current quarter, but it's hard to complain about a company that still expects to grow enrollment by 20% this year.
Steak n Shake
I ripped into the "steakburger" chain two months ago, when a pointless 1-for-20 reverse stock split to catapult its stock into the hundreds struck me as an extreme case of Buffett envy.
I may have dismissed CEO Sardar Biglari too soon. Oh, the company's helmsman definitely has a Warren Buffett wannabe aura to him. One of his first acquisition targets is a small insurer. The insurer has yet to agree to come onboard, but that move is so Buffettesque! He's also acquiring Western Sizzlin. A Buffett buffet, anyone?
It isn't as easy to sniff out a diamond in the rough as it was when Buffett first arrived at Berkshire Hathaway
Mutual fund operators have been on fire lately. This is an industry that leans on the management fees it charges, based on a percentage of fund assets. There are two ways for a fund's asset base to grow: capital appreciation and net inflows.
They go hand in hand, really. When stocks are rallying, as they did last year, investors feel comfortable buying into stock and bond mutual funds. Franklin closed out January with $548 billion under assets, 36% higher than its asset base a year earlier.
Chipotle Mexican Grill
Rolling burritos has never been this lucrative.
Chipotle has established itself as a darling of the quick-service restaurant industry, completely obliterating Wall Street profit expectations throughout 2009. The chain may have spooked investors when it reiterated its guidance for flat comps in 2010, but Chipotle's margin-widening trends -- along with domestic expansion and a gradual push overseas -- should serve bottom-line results well.
Big but nimble
Big prices don't have to translate into slow-moving behemoths. In fact, five of the 59 stocks trading above $100 these days are active recommendations in the Motley Fool Rule Breakers newsletter service.
Two of those five are Chipotle and Intuitive Surgical. The other three, along with all complete recommendations, are available to service subscribers.
A big price isn't a barrier to becoming an even bigger price in the future. Just ask Warren Buffett.