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
|Caterpillar (NYS: CAT)||****||$102.48||9.2%|
|Novo Nordisk (NYS: NVO)||****||$116.24||34.7%|
Source: CapitalIQ, a division of Standard & Poor's; Motley Fool CAPS.
But just because these stocks are purring is no reason to pick them up 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 launch pad for your own research and analysis.
The world's largest heavy-machinery manufacturer, Caterpillar, is placing a big bet on China to help it grow, as it represents its single largest market. But the economic engine there might be grinding to a halt, or a much slower pace, as it was also the only market for Caterpillar that had lower construction machinery sales in the third quarter. The brakes the Chinese are applying to the growth apparatus is having its desired effect. Fortunately for the heavy equipment maker, the rest of the developing world was still growing as sales were at or near record levels.
Caterpillar is set to report fourth-quarter results next week and analysts are looking for profits to rise 18% on a 25% increase in sales. That compares favorably to industry peer Deere (NYS: DE) , which had a pretty remarkable year last year, though it wasn't reflected in its share price. Wall Street is looking for its sales to jump 16%, but also for less than a 3% hike in earnings per share when it reports next month. So while both are valued similarly on future earnings estimates, Caterpillar is the much more attractive play based on the company's higher five-year growth estimates and its superior ability to generate free cash flow.
It's the developing world's need for infrastructure that seems to have informed the opinion of CAPS member Scorpioray, who is looking for the construction equipment manufacturer to outperform the market.
One of the few globally respected "big machine" brands. The world is due for some new roads, houses, offices ... after four long years of austerity.
Add Caterpillar to your Watchlist to see if the road ahead will be paved with its equipment.
Veni, vidi, vici
The market researchers at Global Information estimate Medtronic (NYS: MDT) owns about 20% of the global insulin market, followed by Novo Nordisk and Sanofi (NYS: SNY) , at 16% and 15%, respectively, or more than half the market combined. But with diabetes a growing problem, the insulin delivery-device market is expected to grow at an annual rate of 6%, hitting $11 billion by 2017 indicating there's more than enough opportunity for each of the players to grow shares further. That said, both Medtronic and Sanofi investors should closely watch the explosive growth Novo is seeing.
The catalyst for Novo, however, is the expanded use of diabetes drug Victoza, which accounted for 54% of total revenue growth as sales nearly tripled year-over-year. With solid patent protection and promising new pipeline candidates Degludec and DegludecPlus under consideration by regulatory agencies around the globe, it appears Novo might have the most to gain here.
Its near-single-minded focus on treating diabetes has CAPS member Anjaconda figuring the Danish pharmaceutical will have years of growth before it.
Diabetes products -- this is where it's at. Look at the stats and predictions for the disease in the coming years!
Diagnose its prospects on the Novo Nordisk CAPS page, and put it in the Fool's free portfolio tracker to see who will gain the most in the coming years.
Count to 10
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At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Joy Global and Medtronic. 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.
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