5 Top 3-Digit Stocks

But you'll also find worthy companies at the opposite end of the
price spectrum. I call them "three-digit stocks," though if they're
anything like Berkshire Hathaway, they can trade in the four-, five-, and six-digit range, too.

Just as a penny stock might not be a good buy simply because it's
cheap, a three-digit stock shouldn't scare you away just because it
carries a hefty price tag. Let's check in with the Motley Fool CAPS
community to see which of these high rollers has the best chance of
success, according to our investor-intelligence database. Here are just
a handful of candidates:

Source: CAPS and Capital IQ, a division of Standard & Poor's. CAPS rating is out of five stars. TTM = trailing 12 months.

Triple-digit titans!

Well, thank goodness for that! Ben Bernanke has proclaimed the recession dead and buried, and Warren Buffett agrees it's over. But I'm not buying it for a second.

New home starts fell in August for the first time since January, and
we're approaching the slack selling season for home sales. In addition,
the huge $8,000 tax subsidy for first-time homebuyers is expiring at
the end of this year. Just like the Cash for Clunkers program,
which sucked car buyers into a narrow window of opportunity, but left
dealers subsequently sucking wind, the tax credit attracted many new
homebuyers who otherwise would have stayed away.

According to the California Association of Realtors, 40% of all
first-time homebuyers said they would not have purchased their homes,
had it not been for the tax credit. And 70% said it was a "very
important" or the "most important" criteria when deciding whether to
buy. So when the subsidy ends, expect to find precious few buyers left.

Single-family homebuilder NVR
is just one of the beneficiaries of the credit, and its stock has
rebounded more than 77% over the past six months. As impressive as that
sounds, it's nothing compared to the stocks of Beazer Homes (NYSE: BZH), which is up more than 600%; Hovnanian (NYSE: HOV), up almost 300%; or Lennar (NYSE: LEN), which has doubled.

CAPS member jed71 is concerned there is more trouble ahead, particularly in certain pockets of the country:

In addition, the firm has very heavy exposure to the
Metro DC / No Va. market. This regional housing market has not yet seen
its bottom. There are still increasing levels of foreclosures and heavy
price reductions in the area, even with the introduction of a new
governmental administration. All of this is quite negative for NVR.
Although I do not believe the company will go out of business, it is
highly unlikely they will continue to outperform the broader market in
the near term.

With unemployment still rising, foreclosures still on the move, and very real problems still facing Fannie Mae and Freddie Mac, it seems a bit premature to say we're at the end of the tunnel.

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.

Want help finding your own three-digit darlings? Join Fool co-founders David and Tom Gardner at Motley Fool Stock Advisor
as they search the market for stocks enjoying not only a triple-digit
price tag, but the potential to double, triple, and even quadruple in
value over time.

© 2009 UCLICK, L.L.C