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 the highest prices stocks from the following companies.
But remember, a high stock price in and of itself does not equal a company's total market value. This is determined by market capitalization, which is the number of shares outstanding multiplied by the share price. A company's stock price by itself, without knowing how many shares there are, is not useful. For instance, a company with ten shares at $1 million each would certainly have a high share price, giving a total value of $10 million. Another company may have ten million shares at just $200 a piece, but it would be worth $2 billion.
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, making even these high-flyers accessible.
Here's a list of the top five highest-priced stocks that trade in the U.S., as of October 2022, excluding those sold only on over-the-counter (OTC) markets. All data is current as of Jan. 31, 2023, unless otherwise noted.
- 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.
- The most expensive stocks in the United States include Berkshire Hathaway's Class A shares, NVR, Seaboard, Autozone, and Booking Holdings.
- Stock Price: $473,000
- Market Capitalization: $679.59 billion
Berkshire Hathaway 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 purchased by Warren Buffett in 1965. Originally a textile company, it 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 price. This stock closed at $311.52 on Jan. 31, 2023.
- Stock Price: $5,270
- Market Capitalization: $16.71 billion
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.
You can calculate a company's stock price by dividing its market cap by the total number of outstanding shares.
- Stock Price: $3,920.50
- Market Capitalization: $4.52 billion
Seaboard is a multinational corporation that deals in grains and agricultural 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: $2,438.85
- Market Capitalization: $46.36 billion
AutoZone 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 2022, AutoZone operated 6,196 stores in the United States, 706 stores in Mexico, and 76 stores in Brazil. The company was founded in 1979 and is based in Memphis, Tennessee.
When a stock price rises too high, the company's board of directors will often choose to undergo a stock split, reducing the share price but at the same time increasing the number of shares outstanding. This has no real effect on the company's market cap, but results in lower share prices.
- Stock Price: $2,434.10
- Market Capitalization: $93.19 billion
Booking Holdings is an online provider of travel and travel-related services, including flights, hotels, car rentals, and vacation packages. Booking Holdings serves customers and partners in more than 220 countries.
The company's roots go back to 1997 when Priceline launched. Priceline purchased acquired Booking.com in 2005. It became Booking Holdings in 2018.
Why Are Some Stocks So Expensive?
Let's face it. The stocks listed here are probably out of reach for most retail investors. But why are these and other companies' stocks so overpriced? There are several reasons.
One of the primary reasons is that there are so few shares available. The fewer outstanding shares that a company has indicates a higher stock price while the reverse is true for those with lower share prices—that there are more outstanding shares.
Another reason is the lack of stock splits. A stock split occurs when companies issue additional shares to their existing shareholders. Companies commonly split their stocks using 2-for-1 or 3-for-1 ratios. This action increases the total number of shares held by investors, boosts the stock's liquidity, and decreases the stock price. Berkshire Hathaway is a classic example of companies that never split its stock. Doing so by, say a 2-for-1 ratio, would drop the price by half.
Then there's the simple concept of demand. Investors may flock to the market for shares in a particular company for various reasons, including good economic news, positive company results, or industry-related advancements. When they purchase shares, it depletes the supply, therefore driving up the price per share.
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.