How far can the price of a share go? In theory, as high as anyone can count. There is literally no limit on how much an action can increase, and the continued success of an action is determined by the performance of its business. Usually, a high stock price indicates that a business has been successful, although that does not guarantee that it has been.
Below are 10 of the most expensive stocks – the ones with the highest share prices – that investors can buy and why a stock price doesn’t mean much to you.
What are the 10 most expensive stocks?
The list below includes the stock prices of the companies included in the Russell 1000 Index, which has approximately 1,000 of the top-valued companies on the US stock exchanges. (Don’t confuse it with the Russell 2000 Index, which tracks some of the smaller companies.)
Note: Share prices and market capitalizations are as of the close of August 18, 2021.
1. Berkshire Hathaway Series A (BRK-A)
Berkshire Hathaway offers the grandfather stock prices managed by the grandfather of investors, the legendary Warren Buffett. This conglomerate has stakes in a number of companies, including insurance, railways and utilities. He also has a huge portfolio of stocks. If you don’t have nearly half a million dollars to buy an A share, you can still buy B shares for a much lower price.
Share price: $ 430,651
Market capitalization: $ 647 billion
2. NVR (NVR)
NVR is a Washington, DC area-based home builder and operates the Ryan Homes, NV Homes, and Heartland Homes brands.
Share price: $ 5,101
Market capitalization: $ 18.2 billion
3. Seaside (SEB)
Seaboard is an agribusiness and transportation company based in the Kansas City area. It produces and sells pork, sugar, alcohol, corn and other agricultural products.
Share price: $ 4,054
Market capitalization: $ 4.7 billion
4. Amazon.com (AMZN)
Amazon runs its well-known e-commerce business that seems to offer it all. But it also operates Amazon Web Services, or AWS, a huge provider of cloud and IT services, among other companies.
Share price: $ 3,201
Market capitalization: $ 1.62 trillion
5. Alphabet Series C Series (GOOG)
Alphabet is known for its largest company Google, the search engine giant, but it is also growing a number of other companies, including Waymo, a company focused on self-driving cars. Alphabet has two series of publicly traded stocks, and both have made it to this top 10 list.
Share price: $ 2,731
Market capitalization: $ 1.82 trillion
6. Alphabet Series A Series (GOOGL)
The Alphabet Series A action comes at a price point that comes close to its Series C cousin.
Share price: $ 2,709
Market capitalization: $ 1.82 trillion
7. Reserve credit notes (BKNG)
Booking Holdings is the company behind travel sites Booking.com and Priceline as well as OpenTable for restaurant reservations.
Share price: $ 2,086
Market capitalization: $ 85.7 billion
8. Cable One (CABO)
Based in Phoenix, Cable One is a provider of voice, video and Internet services to consumers and businesses.
Share price: $ 1,996
Market capitalization: $ 12.1 billion
9. Mexican Grill Chipotle (CMG)
Chipotle is known for its quick and casual Mexican restaurants of the same name. Based in Newport Beach, California, the company operates several thousand locations in the United States and a handful internationally.
Share price: $ 1,851
Market capitalization: $ 52.0 billion
10. Automatic zone (AZO)
Autozone is known for its chain of retail stores of the same name, where it sells auto parts and accessories.
Share price: $ 1,614
Market capitalization: $ 34.8 billion
The share price doesn’t tell you much
It’s fun watching high stock prices, but the point is, a stock price doesn’t tell you much, on its own. As you can see from the list above, a stock can be any price, but the size of the company – as measured by market capitalization – can be anything. The price of a stock alone doesn’t even tell you how expensive a stock is!
While there are huge companies on this list – Alphabet and Amazon, for two – Microsoft and Apple don’t make the cut, even though they are both of comparable size. So what is going on?
You need several additional pieces of information to make the share price meaningful:
These pieces of information provide the context to make sense of the course of action.
Total number of shares
The total number of shares in the company tells you how many shares the company has been divided into. A company can be divided into any number of shares, provided the shareholders consent to it.
Think of a business like a pizza, where you can cut any number of slices. However, the size (share price) of an individual piece doesn’t tell you much about the size of the entire pizza.
In fact, many companies voluntarily keep their stocks within certain ranges, often $ 20 to $ 120 per share. They will strategically use a stock split to keep their stocks at a lower price and to make it easier for investors to buy certain stocks, which means they will need less money to invest.
A company’s market capitalization, or market cap, is more useful. Again, think about this sliced ââpizza. Well, the market cap is the total size of all of those brackets put together. So, market capitalization tells you the size or total value of the business.
Market capitalization = Share price * Number of shares outstanding
And that’s why comparable companies like Apple and Microsoft are not on the list. They have a large number of shares, but they have cut the total stock of the company into even more slices, thus lowering the share price in the process.
Earnings per share
One final piece of information that investors use to analyze the company is its earnings per share. They will use earnings per share to determine a price-to-earnings (P / E) ratio, to measure how much they are paying for a given amount of company profit. And this is how some investors measure the real price of a stock.
A higher P / E ratio indicates that investors are paying more for the company’s profits, while a lower ratio indicates that they are not as willing to pay as much.
So a company’s earnings per share shows you how much you get for the share price you pay. You are likely to get much higher earnings per share for companies with high stock prices than those with low stock prices, all other things being equal.
For example, Amazon reported earnings per share of $ 41.83 in 2020 from its current price of nearly $ 3,000. Meanwhile, Berkshire Hathaway reported earnings of $ 26,668 for each Series A share, which is priced at around $ 430,000.
Combine this EPS information with the stock price and you can determine how much you are paying for every dollar in company profit.
At the end of the line
While it can be fun to highlight high-priced stocks, the price itself doesn’t tell you much. Rather, you need information on the total size of the pie in order to assess the true scale of a business. As former New York Yankees wide receiver and baseball legend Yogi Berra joked, âYou better cut the pizza into four pieces because I’m not hungry enough to eat six.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past performance of investment products is not a guarantee of future price appreciation.