You Get What You Pay For
Back when the market bottomed out in March, we saw come crazy stock valuations. Dow stalwart General Electric (GE) bottomed out at nearly $5. Automaker Ford (F) briefly was trading for about $1 per share at its worst point, and Citigroup (C) actually broke through the dollar floor to trade at a historic low of just 97 cents. It was a bargain-hunter’s dream.
But it was also a bargain-hunter’s nightmare, with many big-name companies never bouncing back from the basement. Take the now-bankrupt GM, for instance. Or if you want a more recent example, look at the collapse of CIT group that marked the fifth-largest corporate bankruptcy in history. Investors who thought they were buying a sure thing on the cheap literally lost everything on these risky bets.
Let me state the obvious: Stock prices are all relative. If you buy a stock at $2, that’s only a good price if shares go up. Any investor worth his salt doesn’t care if a stock is at $6 or $60 right now — just that the balance sheet behind those shares is impressive, and the numbers indicate future growth.
Don’t fall into the trap of thinking stocks with pricey shares are a bad investment. There are some fantastic companies out there trading for more than $100 per share, and it would be a shame if you missed out on the gains they’ll produce just because they are priced higher than many other companies.
Here are seven of my favorite stocks right now, and they are all trading over $100 per share. Though these companies are “expensive,” I would much rather own a handful of shares in these powerhouses than scrounge in the bargain bins for scratch-and-dent penny stocks. For these companies, you’re really getting what you pay for.