Expensive is a relative term when talking about the stock market. Many investors measure the cost of a stock by the price of the stock relative to its earnings or sales.
However, some become attracted to a company’s stock simply because of the quoted price. A stock has become so expensive that a single share is worth more than a house in many parts of the country. While it may be difficult to understand how a piece of paper could be so valuable, a stock price may not represent the value of a company as well as some might assume.
What is the highest stock price right now?
As noted, investors can determine the most expensive stock in several ways. For this article, GOBankingRates defined “expensive” by the quoted share price.
The most expensive stock by price is an A-share of Berkshire Hathaway (NYSE: BRK.A). This stock closed at $429,200 per share on July 20. Warren Buffett, longtime owner of the company, is the one who helped take these stocks to such heights.
About Berkshire Hathaway
Berkshire Hathaway is involved in a number of different business activities, with subsidiaries operating in industries ranging from insurance to real estate, energy and utilities, rail freight, restaurants and commodities consumer goods such as jewelry, furniture and household items. Some of its well-known brands include Geico, Dairy Queen, Oriental Trading Company, Duracell, and Fruit of the Loom.
Despite the popularity of the brands that Berkshire Hathaway owns, many know it best for its stocks. In fact, investors expect Buffett to release his annual letter to shareholders each year, in part because the letters list Berkshire Hathaway’s holdings. These consist of a portfolio of well-known companies, with Apple making up its largest holding by market value and Bank of America topping the list by number of shares held.
Berkshire Hathaway Stock
Berkshire Hathaway stock hit its price for two main reasons. One is earnings growth. Stocks tend to trade at a multiple of their earnings. Over time, Berkshire has seen massive growth.
In 1965, the company recorded earnings of just under $4.85 million. In 2019, the most recent year with revenue unaffected by the pandemic, the company reported net income of more than $81.4 billion, or $49,828 per share. This means that profits have increased nearly 17,000 times between 1965 and 2019. With earnings per share for the last 12 months reaching $55,767.06 as of July 21, the company seems unstoppable.
The second reason is Buffett’s aversion to stock splits. As the term suggests, a stock split divides shares into multiple parts. Say, for example, you own 100 shares of Company X at $100 per share. If this company instituted a 4-for-1 stock split, the shares would split into four equal parts. This would give you 400 shares of Company X at $25 per share.
Good to know
Berkshire’s A shares have never split. However, to attract small investors, the company introduced B shares (NYSE: BRK.B). Today, a B share is about 1/1,500 the size of an A share. At its most recent closing price of $286.04 per share, small shareholders often invest in the company through of these B shares.
What are the 10 most expensive stocks right now?
Berkshire Hathaway is far from the only stock to have reached a high price. These are the most expensive stocks, measured by the stock’s closing price on July 20.
1. Berkshire Hathaway (A-shares) (BRK.A)
- Price: $429,200 per share
- Market capitalization: $622.34 billion
- Net income (2021): $89.8 billion
- Services provided: Insurer, holding
- Competitors and similar companies: Any state, progressive
2. NVR Inc. (NVR)
- Price: $4,442.20 per share
- Market capitalization: $14.61 billion
- Net income (2021): $1.24 billion
- Services provided: Residential construction, mortgage bank
- Competitors and similar companies: DR Horton, Lennar
3. Seaboard Corp. (SEB)
- Price: $3,944.89 per share
- Market capitalization: $4.62 billion
- Net income (2021): $570 million
- Services provided: Food, shipping, commodity trading
- Competitors and similar companies: Bunge, group of acorns
4. AutoZone Inc. (AZO)
- Price: $2,194.53 per share
- Market capitalization: $42 billion
- Net income (2021): $2.41 billion
- Services provided: Retail sale of automotive spare parts and accessories
- Competitors and similar companies: O’Reilly Auto Parts, Advanced Auto Parts
5. Booking Holdings Inc., formerly Priceline (BKNG)
- Price: $1,834.80 per share
- Market capitalization: $73.45 billion
- Net income (2021): $1.17 billion
- Services provided: Online travel services
- Competitors and similar companies: Expedia, Tripadvisor
6.Texas Pacific Land Corp. (DPT)
- Price: $1,811.94 per share
- Market capitalization: $13.88 billion
- Net income (2021): $270 million
- Services provided: Oil and gas exploration and production
- Competitors and similar companies: Black Stone Minerals LP, Brigham Minerals Inc.
7. Cable One Inc. (CABO)
- Price: $1,406.84 per share
- Market capitalization: $8.24 billion
- Net income (2021): $291.82 million
- Services provided: Telecom services
- Competitors and similar companies: Altice Europe SA, Liberty Global
8. Chipotle Mexican Grill Inc. (CMG)
- Price: $1,374.88 per share
- Market capitalization: $37.44 billion
- Net income (2021): $653 million
- Services provided: Fast casual dining
- Competitors and similar companies: BJ’s Restaurants, Noodles & Co.
9. Markel Corp. (MKL)
- Price: $1,271.97 per share
- Market capitalization: $16.87 billion
- Net income (2021): $2.44 billion
- Services provided: Property and accident insurance
- Competitors and similar companies: Fairfax Financial Holdings Ltd., Chubb Limited, Alleghany Corp.
10. Mettler-Toledo International Inc. (MTD)
- Price: $1,166.42 per share
- Market capitalization: $25.98 billion
- Net income (2021): $768.99 million
- Services provided: Diagnosis and health research
- Competitors and similar companies: Waters Corp., Perkin Elmer Inc.
Invest in expensive stocks
At first glance, investing in expensive stocks may seem out of reach for the average investor.
Indeed, in previous decades, stocks could split to attract average investors. This was one of the reasons cited for Amazon’s recent split. They could also separate to gain a place or stay on the Dow Jones index. Since the Dow Jones is price-weighted, high-priced stocks can exert a disproportionate influence on the index, prompting the Dow Jones to drop out of business to keep the index balanced. Many believe this was one of the main factors behind Apple’s 4-to-1 stock split in 2020.
keep in mind
B shares and stock splits aren’t your only option for owning stock in these ultra-expensive companies. Thanks to trading apps such as Robinhood, retail investors can now buy fractional shares. Consequently, splits could become rarer than in previous decades.
Additionally, investors tend to value stock prices relative to earnings. Given this metric, investors might be happy to pay $429,200 per share when it produces more than $55,767 per share — about 13% of the stock price — in returns in a single year, like Berkshire Hathaway did so between July 2021 and July 2022. Conversely, $1,374.88 per share for Chipotle may seem expensive in comparison, with its gain of $24.05 per share, or about 1.75% of the share price, for the same period.
It’s important to remember that while a high stock price may be the result of significant growth in the past, it’s not always a reliable indicator of a stock to buy in the future.
Daria Uhlig contributed reporting for this article.
Data is accurate as of July 21, 2022, unless otherwise stated, and is subject to change.
This article has been updated with additional reports since its original publication.
This article originally appeared on GOBankingRates.com: Top 10 Most Expensive Stocks: What’s the Most Expensive Stock Right Now?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.