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. I call 'em "three-digit stocks," because they trade above $100 per share.
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:
Return on Capital (TTM)
|Amazon.com (NAS: AMZN)||***||$180.21||9.4%|
|Panera Bread (NAS: PNRA)||****||$131.53||23.3%|
|Boston Beer (NYS: SAM)||****||$102.00||28.2%|
Source: S&P Capital IQ, Motley Fool CAPS.
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.
I purchased my first digital book the other day. Like my purchase of an iPad this summer and my MacBook Pro a few years ago, the book buy hardly identifies me as a trailblazer. I tend to wait until a consensus has formed and the utility of a product is apparent before making a move. So my decision to purchase an e-book from Amazon.com should be a signal that this isn't the wave of the future, but rather is very much the here-and-now, and that is good news for investors in the e-commerce king.
Despite critics panning the Kindle Fire, Amazon is still expected to sell 5 million units in the fourth quarter. I don't have an e-book reader, just the Kindle for Mac app, though undoubtedly that's my next purchase if history is any guide. Bricks-and-mortar bookseller Barnes & Noble (NYS: BKS) understands the heft the digital world carries, which is why its own Nook could very well be its salvation. Only lately has its counterpart in the consumer electronics arena, Best Buy (NYS: BBY) , come to this realization. Best Buy's third-quarter earnings report was dismal, but the electronics superstore's online division outperformed the traditional physical business.
While there are lingering concerns over profit margins (which helps explain Amazon's fall from nearly $250 a share in October down to $180), CAPS member AsianEagle sees the Fire as the device which leads Amazon back up:
Last couple months sales of Amazon Kindle are increasing; Kindle Fire is competitive device; Sales of Black Friday and Cyber Monday are much better than last year.
Certainly the CAPS community is pretty much in agreement, as 80% of those rating the e-tailer have it outperforming the broad indexes. Add Amazon.com to your watchlist to see if it's correctly read its future.
Not so hungry?
According to NPD Group, casual-dining and midscale restaurants, which comprise 11% and 10% of the industry's eateries, respectively, have suffered a steady decline in diners since 2009. Not even fast food has been a consistent grower over the past couple of years -- that distinction belongs to upscale restaurants.
Yet one area that is positioned to experience the greatest growth is the fast-casual segment represented by the likes of Panera Bread and Chipotle Mexican Grill (NYS: CMG) , which feature more and arguably better service along with better quality fare. NPD said earlier this year that fast-casual restaurants saw a 17% increase in traffic over the last three years, while total quick-serve traffic fell. Demographics make the future for this segment bright.
CAPS member sylance would be hard-pressed to disagree and suggests that with its top-notch management, Panera will be able to expand further: "Panera's leadership are creating a unique culture and I believe the concept will continue to grow."
Add your thoughts in the comments section below or on the Panera Bread CAPS page, and put it in the Fool's free portfolio tracker to see if it rises to expectations.
Brewer Boston Beer served up some frothy earnings last month as depletions, an industry metric that measures distributor sales, grew 11% and ship volume was up 7%. Even though the Freshest Beer Program drained $0.02 per share from results, the craft brewer beat estimates by $0.11 per share. The just-in-time Freshest Beer Program costs the Samuel Adams brewer money upfront because it reduces distributor inventories, but it saves money overall as it minimizes the amount of time its beer sits on wholesalers' shelves.
Boston Beer has the benefit of being positioned in the hot craft brew market rather than the mass-production processes of Molson Coors (NYS: TAP) , which served up disappointing results that it blamed on the overall economy. According to the Brewers Association, beer sales have been flat, but craft brew sales were up 15% in the first six months of 2011.
With 95% of the more than 1,400 CAPS members rating the craft brewer marking it to outperform Wall Street in the quarters ahead, it's clear they believe it has more room to move on tap. Add Boston Beer to your watchlist and see if the heady growth it has already enjoyed is just a portent of things to come.
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 contributorRich Dupreyowns shares of Best Buy, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Amazon.com, Chipotle, Best Buy, Panera, Molson Coors, and Boston Beer.Motley Fool newsletter serviceshave recommended buying shares of Molson Coors, Boston Beer, Chipotle, Amazon.com, and Panera, as well as writing covered calls in Best Buy. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.