How high can a stock price go? In theory, as high as anyone can count. There is literally no limit to a stock’s rise, and a stock’s continued success is determined by its business performance. In general, a high stock price indicates that a company has been successful, although it does not guarantee that it has been.
Below are 10 of the most expensive stocks – the ones with the highest price – that investors can buy and why a stock price doesn’t tell you much.
What are the 10 most expensive stocks?
The list below includes the stock prices of companies included in the Russell 1000 Index, which includes approximately 1,000 of the largest companies traded on US stock exchanges. (Do not confuse it with the Russell 2000 Indexwhich follows some of the smaller companies.)
Note: Stock prices and market capitalizations are as of the close of August 18, 2021.
1. Berkshire Hathaway Series A (BRK-A)
Berkshire Hathaway offers the ancestor of stock prices led by the ancestor of investors, the legendary warren buffet. This conglomerate has stakes in a number of businesses, including insurance, railroads and utilities. He also has a huge stock portfolio. If you don’t have nearly half a million dollars to buy an A share, you can always buy B shares at a much lower price.
Stock price: $430,651
Market capitalization: $647 billion
NVR is a homebuilder based in the Washington, DC area, and it operates the Ryan Homes, NV Homes, and Heartland Homes brands.
Stock 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 products, sugar, alcohol, corn and other agricultural products.
Stock price: $4,054
Market capitalization: $4.7 billion
4. Amazon.com (AMZN)
Amazon runs its well-known e-commerce business which seems to offer it all. But it also operates Amazon Web Services, or AWS, a huge cloud and IT services provider, among other businesses.
Stock price: $3,201
Market capitalization: $1.62 trillion
5. Alphabet Series Series C (GOOG)
Alphabet is known for its biggest company, Google, the search engine giant, but it also develops a number of other businesses, including Waymo, a company focused on self-driving cars. Alphabet has two series of publicly traded stocks, and both are in this top 10.
Stock price: $2,731
Market capitalization: $1.82 trillion
6. Alphabet Series A (GOOGL)
The Series A Alphabet stock is priced around its Series C cousin.
Stock price: $2,709
Market capitalization: $1.82 trillion
7. Reservation of assets (BKNG)
Booking Holdings is the company behind the Booking.com and Priceline travel websites as well as OpenTable for restaurant reservations.
Stock 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 for homes and businesses.
Stock price: $1,996
Market capitalization: $12.1 billion
9. Chipotle Mexican Grill (CMG)
Chipotle is known for its fast-casual Mexican restaurants of the same name. Based in Newport Beach, Calif., the company operates several thousand locations in the United States and a handful internationally.
Stock price: $1,851
Market capitalization: $52.0 billion
10. Auto Zone (AZO)
Autozone is known for its chain of retail stores under the same name, where it sells auto parts and accessories.
Stock price: $1,614
Market capitalization: $34.8 billion
The stock price doesn’t tell you much
It’s fun to watch high stock prices, but the fact is that the price of a stock doesn’t tell you much by itself. As you can see from the list above, a stock can be any price, but company size – as measured by market capitalization – can be anything. A stock price alone doesn’t even tell you how much a stock costs!
While there are huge companies on this list — Alphabet and Amazon, for two — Microsoft and Apple don’t make the cut, despite both being relatively large. So what’s going on?
You need several additional pieces of information for the stock price to be meaningful:
These pieces of information provide the context to make sense of the stock price.
Total number of shares
The total number of company shares tells you how many tranches the company has been divided into. A company can be divided into any number of shares, provided the shareholders consent.
Think of a business like a pizza, where you can cut any number of slices. However, the size (stock price) of an individual piece doesn’t tell you much about the size of the whole pizza.
In fact, many companies deliberately 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 fewer dollars to invest.
A company market capitalization, or market capitalization, is more useful. Again, think about this sliced pizza. Well, the market capitalization is the total size of all these slices put together. So, market capitalization tells you the total size or value of the company.
Market capitalization = Share price * Number of shares outstanding
And that’s why big comparable companies like Apple and Microsoft aren’t on the list. They have a large number of shares, but they have cut the company’s total stock into even more slices, thereby reducing the share price.
Earnings per share
A 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/earnings ratio (P/E), to measure how much they pay for a given amount of company profit. And that’s how some investors measure the true price of a stock.
A higher P/E ratio indicates that investors are paying more for the company’s earnings, 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 for 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 stock price of nearly $3,000. Meanwhile, Berkshire Hathaway reported earnings of $26,668 for each Series A share, where the price is around $430,000.
Combine this EPS information with the stock price and you can figure out how much you’re paying for every dollar of company profit.
At the end of the line
While it can be fun to highlight high-priced stocks, the price doesn’t tell you much on its own. On the contrary, 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 catcher and baseball legend Yogi Berra joked, “You 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 cautioned that past performance of investment products does not guarantee future price appreciation.