There's a BOGO Sale on These Top Stocks

The world's top value investors love it when their best stocks ideas are selling at bargain-basement prices. For those rarefied investors, companies offering fire-sale prices become no-brainer buys. So regular investors like you and me would do well to emulate the masters and look at companies offering a "buy-one-get-one" sale on their stocks -- those that are trading for half or more off their recent highs.

Naturally, you'll want to do more due diligence before buying. Low-priced appliances in the dent-and-ding section of your home-remodeling superstore might be there for more reasons than just a few scratches on the surface: Real trouble might be lurking below. Same thing here: The market is down only 6% from its 52-week highs, so make sure there's nothing seriously wrong with the company before you plug it into your portfolio.

No sale
Admittedly, it's hard to watch your stock drop -- and drop and drop and drop -- when it's supposed to be doing so well. But sometimes that just means the market is giving you better price points at which to reduce your total cost basis. I think that's the case with Arcos Dorados (NYS: ARCO) , the Latin American chain of McDonald's restaurants.

By all accounts this stock should be hitting new highs, not seeing how fast it can drop to new lows. Indeed, Arcos' stock is down 55% from the highs it achieved last fall and is down more than 40% over the last year. There are several explanations for this, none of them satisfying, but it suggests that the Argentinean burger flipper can bounce back.

The first is political risk. Because it's based in Buenos Aires, Arcos has to contend with the country's president, Cristina Kirchner. Like Venezuela's Hugo Chavez, who imposed currency controls in 2010 that alone caused a 35% decline in adjusted EBITDA, Kirchner is acting like the Hamburglar and stealing corporate assets. So far she's nationalized oil giant YPF.

The second point is more hopeful. As part of its master franchise agreement with McDonald's, Arcos is required to invest at least $180 between 2011 and 2013 to open at least 250 restaurants. It's also going to spend as much as $250 million more on an additional 100 stores that it agreed to open as part of having raised $400 million reais last year.

All of these capital expenditures dragged down operating income last quarter even as adjusted EBITDA rose more than 12% on a constant currency basis. With comparable sales up 11.6% last quarter, there doesn't seem to be much concern that it's going to find customers for the restaurants it's building. So it's laying the groundwork for future profits even though it means it has to sacrifice current earnings in the process.

So it can be frustrating, but that's why I say Arcos Dorados' discounted shares are an opportunity. The Fool's Rex Moore also believes it can turn around its position, as do 98% of the 450 CAPS members rating the franchisee. I've marked it to outperform the broad index on CAPS, but let us know in the comments section below or on the Arcos Dorados CAPS page if you agree, and then add the stock to the Fool's free stock tracking service to see if there's more in its future than just flipping burgers.

Making the connection
Wireless network equipment maker Riverbed Technology (NAS: RVBD) finds itself in a bit of a bind. At a time when mobile communications and computing are soaring, it's in the midst of a product transition phase that has customers holding back on making purchases. Last quarter sales dropped 10% (just a management forecast), which is allowing rivals like Cisco (NAS: CSCO) and F5 Networks (NAS: FFIV) to gain ground.

But Riverbed's technological excellence still gives it an edge. Although this year is not shaping up so well right now as there's resistance to upgrading, 2013 could be when those new products boost the company to the forefront again. It certainly thinks its shares are cheap, having added $150 million to its share repurchase program, giving it more than $230 million to make timely buybacks of its stock.

With the economy slowing and unemployment on the rise again, there are going to be challenges facing all of the players in the space. But sometimes the market just hands you a gift, which is why the Fool's Rich Smith (who goes by the name TMFDitty on CAPS) finds Riverbed ridiculously cheap today. "14.6x P/FCF, with an EV/FCF that's even cheaper once you net out Riverbed's copious cash cache. Against a 21% growth rate, Riverbed's not expensive -- it's shockingly cheap."

Tell me on the Riverbed Technology CAPS page or in the comments section below if you think it can regain the lead, then follow its progress by adding the ticker to your watchlist.

Have half a mind
You can tell us whether these stocks are twice as good at half the price, but if you're looking for dividend stocks that pay you to wait for their price to recover, check out the two fistfuls of companies the Motley Fools analysts have found that offer long-term protection. Get the report "Secure Your Future With 9 Rock-Solid Dividend Stocks" absolutely free to see which ones the Fool is bullish on.

At the time thisarticle was published Fool contributor Rich Duprey owns shares of Cisco Systems, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Riverbed Technology, Arcos Dorados Holdings, and Cisco Systems. Motley Fool newsletter services have recommended buying shares of Riverbed Technology, McDonald's, and F5 Networks. Motley Fool newsletter services have recommended creating a stock position in Riverbed Technology. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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