High-Priced Stocks Worth Every Penny
Penny stocks are one way to double your money, though it's fraught with risk, but there are equally shiny opportunities trading at the other end of the price spectrum, too. I call 'em "three-digit stocks," yet if they're anything like Berkshire Hathaway they can trade in the four-, five-, and six-digit range, too.
A penny stock might not be a good buy simply because it's cheap, and a three-digit stock shouldn't scare you away just because it carries a hefty price tag. Handsome is as handsome does. Let's check in with the Motley Fool CAPS community to see which of the high-priced stocks below earn the greatest confidence from our investor-intelligence database:
CAPS Rating (out of 5)
Return on Capital, TTM
|CARBO Ceramics (NYS: CRR)||***||$147.84||18.5%|
|ProShares Ultra Silver (NYS: AGQ)||*||$224.30||NA|
|salesforce.com (NYS: CRM)||*||$117.50||0.5%|
Source: Capital IQ, a division of Standard & Poor's; Motley Fool CAPS. NA = not available.
But just because these stocks are purring is no reason to jump into them blindly. Catching a tiger by the tail -- or a knife falling from on high -- can end up leaving you scratched and bleeding. That's why we recommend you use this list as a launchpad for your own research and analysis.
Considering that no oil or gas drills operate in New Jersey, Gov. Chris Christie's one-year moratorium on hydraulic fracturing -- instead of the complete ban the Legislature sought -- is mostly symbolic. Add in, as Halliburton (NYS: HAL) notes, that nearly 90% of onshore wells require "fracking" to complete, New Jersey is the 11th largest consumer of natural gas in the country, and the state's important chemical manufacturing industry relies heavily on natural gas, a ban on fracking would be self-defeating.
The anti-fracking debate is growing nationally as fears of it being a danger to groundwater supplies grow. Yet hydraulic fracturing has been used since the 1940s, is highly regulated, and has been studied numerous times over the years, including by the Environmental Protection Agency, state regulators, and federal commissions.
Halliburton and Schlumberger (NYS: SLB) are major oil and gas services companies that use fracking to complete wells. A key ingredient in the process is "proppants," granular beads that prop open the fracture created by hydraulic pressure allowing the oil and gas to flow more freely. CARBO Ceramics is the premier manufacturer of proppants, though France's Saint-Gobain is its largest rival and China GengSheng Minerals (ASE: CHGS) has begun making proppants for sale there. Natural gas production, which has continued apace despite low prices, will continue to drive CARBO Ceramics' performance.
Highly rated CAPS All-Star kkconway likens CARBO's pre-eminent proppant position as a license to print money, a view no doubt echoed by 94% of the 352 CAPS members that rate the oil and gas services company to outperform the market. Add your own thoughts on the CARBO Ceramics CAPS page on whether it has a fractured future.
Unlike the iShares Silver Trust (NYS: SLV) that simply reflects the price of silver it holds, the ProShares Ultra Silver ETF attempts to juice those returns by investing in swap agreements, futures contracts, and other complex financial instruments to obtain double the performance of silver.
Investors would be well advised to tread carefully when using them, since they're designed for day traders. Even ProShares says they're really not appropriate for longer holding periods. However, it has been rather successful over the past year in achieving its stated goal.
CAPS member limeychiney acknowledges the risks inherent in these leveraged ETFs, but thinks conditions are ripe for Ultra Silver to continue growing as it has.
A dicey play as any levered ETF, but with Debt Theater, potential for QE3, and silver's recent pressing into the 40's, I would think a day trader can confidently buy the dips for another couple of weeks. Now having written that, I'll probably lose my shirt :) Good luck out there
Let us know on the ProShares Ultra Silver CAPS page whether it's under pressure to surpass those gains, and add the stock to your watchlist to see whether it can deliver the goods.
A virtual winner
While it's not so surprising to read about yet another Chinese small-cap reverse takeover stock being accused of financial shenanigans, it is a bit of an eyebrow raiser to see salesforce.com get tagged for using aggressive accounting maneuvers. Not that what the customer relationship management specialist has done is illegal, but the analyst making the accusation says earnings would have been 79% lower had it used more conservative policies.
Using tricks such as capitalizing sales commissions and software costs instead of expensing them, salesforce.com is able to boost profits.
Whether CAPS All-Stars had already figured salesforce was playing fast and loose with the numbers, we can't say, but more than half of those rating it thought it would ultimate lose out to the broad market averages.
Put salesforce.com into the Fool's free portfolio tracker and let us know in the comments section below or on the salesforce.com CAPS page whether its stock can count on moving lower.
Count to 10
These three-digit stocks might be on their way to even higher valuations. That's why it pays to start your own research in 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.
At the time this article was published Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Berkshire Hathaway and Schlumberger. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway and salesforce.com. Motley Fool newsletter services have recommended shorting salesforce.com. Try any of our Foolish newsletter services free for 30 days. 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.
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