Some of the most sought-after stocks are those that come with a hefty price tag and many of us equate value with price. The higher the price, the more valuable and, therefore, the more desirable a company becomes. The average investor may not be able to afford a single share of stock from the following companies.
Retail investors need to know which stocks may be difficult to trade because of their high per-share price. It's also worth noting that not all brokers offer their clients the option to purchase fractional shares.
A company's market capitalization is a product of both its share price and the total number of outstanding shares and a company's stock price doesn't necessarily tell you whether a company is over or undervalued.
Here's a list of the top five highest-priced stocks that trade in the U.S., as of July 2022. This list excludes those sold only on over-the-counter (OTC) markets.
- A company's market capitalization is the product of its share price and the number of outstanding shares.
- The stock price doesn't necessarily reflect the overall value of the company.
- Some companies have very few shares available, which may translate to a higher price per share in the market.
- Investors should analyze a company's value and share price using fundamentals.
1. Berkshire Hathaway
- Stock price: $421,800.00
- Market capitalization: $619.9 billion
Berkshire Hathaway (BRK.A) has the highest-priced shares of any U.S. company, and is also one of the largest companies in the world, consistently ranking in the top 10 by market value.
Berkshire was originally a textile company, but was bought by Warren Buffett and is now a holding company for his investments. Among its many holdings are the GEICO insurance company, the BNSF Railway, and the Lubrizol chemical company.
Buffett famously resisted splitting Berkshire's shares, something companies normally do to make it easier to trade their stock. As the company's chief executive officer (CEO), he kept the price high to make it harder to trade and to discourage short-term trading which would increase the stock's volatility.
The company launched a new share class in 1996 (BRK.B), which has a lower price. This allows people to purchase much smaller chunks of the company. They trade for a much more accessible $280.83 in 2022.
- Stock price: $4,370.80
- Market capitalization: $14.38 billion
NVR (NVR) is a homebuilding and mortgage banking company based in Virginia. The company reaches consumers in 34 cities in 14 states, including Maryland, New York, North Carolina, Virginia, Ohio, Indiana, Illinois, South Carolina, Pennsylvania, Tennessee, Florida, Delaware, West Virginia, and New Jersey, as well as D.C.
The homebuilding operations build and sell homes. This division has three different brands, which are Ryan Homes, NVHomes, and Heartland Homes. NVR's building products division supports the homebuilding unit by providing and delivering building supplies.
The company has two different units under its mortgage banking division. NVR Mortgage offers services to homebuyers while NVR Settlement Services provides settlement and title transactions for its homebuilding unit.
Just like Berkshire Hathaway, NVR hasn't split its stock.
A stock split increases the number of outstanding shares by issuing more to existing shareholders. Once the split is completed, the stock's price is reduced.
- Stock price: $3,750.01
- Market capitalization: $4.35 billion
Seaboard (SEB) is a multinational corporation that deals in grains and agriculture products, including pork, sugar, and alcohol. The company also deals in commodity trading and milling.
It built itself up through a series of acquisitions, including its first one in 1918 when it acquired its first flour mill in Kansas. It merged with Hathaway Industries in 1959 and became a public company. That's when it changed its name to Seaboard Allied Milling Corporation.
- Stock Price: $2,403.37
- Market Capitalization: $1.58 trillion
Alphabet (GOOG) was founded in 1998 as the search engine company, Google, and became the world's most popular search engine. After a reorganization in 2015, it changed its name to Alphabet and created a brand new holding company.
A great deal of Alphabet's revenue is derived from various forms of advertising, including performance and brand advertising. The remainder is derived from app sales, in-app purchases, hardware, as well as fees from licensing and services from the Google search engine, YouTube, Google Play, Google Cloud, Chrome browser, and its Android mobile operating system.
• Stock Price: $2,182.37
• Market capitalization: $42.53 billion
AutoZone Inc. (AZO) retails and distributes automotive replacement parts and accessories. The company provides a sales program that offers commercial credit and delivery of parts and other products and sells automotive diagnostic and repair software under the ALLDATA brand.
As of May 7, 2022, AutoZone operated 6,115 stores in the United States, 673 stores in Mexico, and 58 stores in Brazil. The company was founded in 1979 and is based in Memphis, Tennessee.
Is the Price of a Company’s Stocks Indicative of That Company’s Value?
A company's stock price simply represents the current price at which a buyer and seller are willing to trade its stock. Therefore, the stock price alone doesn't paint an accurate picture of its overall value. The stock price is a proportional value of a company's value as it signifies a percentage change in its market cap.
What Is the Most Expensive Stock in the World?
Berkshire Hathaway is the world's most expensive stock. One of the main reasons why the company's stock is so expensive is because it never went through a stock split. The company's CEO, Warren Buffet, deliberately decided against a split to prevent short-term trading which would lead to higher volatility.
What Is the Largest Gain a Stock Has Ever Made in One Day?
Volkswagen stock made the largest gain in a single day in October 2008 after an announcement made by automaker Porsche. The German carmaker's stock spiked more than 93% on October 28 after Porsche said it had a 74.1% stake in the company, which was acquired via derivatives trading.
Why Is Berkshire Hathaway Stock So Expensive?
Berkshire Hathaway CEO Warren Buffet decided against a stock split, which is why the company's shares are so expensive. He felt that this would bring value to the company by preventing high-frequency trading, thereby reducing short-term volatility in the stock.
The company created a new class of shares under the ticker symbol BRK.B in 1996. These shares are more accessible and affordable for the average investor.
The Bottom Line
The stock prices of certain companies may make investing in them virtually impossible for the average investor. Berkshire Hathaway never split its Class A shares because it wanted to keep value without increasing volatility, resulting in a share price that is well over $400,000.
Price is not a definitive indicator of value and future growth. While true for some, it may not be the case for all company stocks. Some companies only issue a low number of shares, which means a higher market price. Be sure to look at the entire picture, including business models, product offerings, and earnings when thinking of investing.