Investors seem to have an aversion to buying stocks with triple-digit price tags. There is a mindset that any stock trading at such a high price has already made its big move, and therefore, the stock is too risky and not worth the buy.
This aversion is so persistent that many companies will split the price of the stock to bring the nominal price tag down and make the shares more attractive to individual investors. A big-name example to split its shares recently is Apple (AAPL).
Before dismissing stocks with high price tags, investors might want to consider the fact that these are often the stocks with the type of strong growth and solid fundamentals that mark them as the very best stocks to buy and likely to continue moving higher.
Here are three expensive stocks to buy that look downright cheap based on their fundamentals and prospects:
Edwards Lifesciences (EW)
Consider a stock like Edwards Lifesciences (EW). EW makes products to treat diseased or defective heart valves and critical care products that are used to measure a patient’s heart function in surgical and intensive care settings. Demand for Edwards Lifesciences’ products is strong right now.
EW earnings exploded last quarter with a 500% year-over-year increase. Edwards Lifesciences has posted four consecutive earnings surprises and estimates for 2014 and 2015 have been rising in the past quarter.
Portfolio Grader noticed Edwards Lifesciences’ fundamentals and growth and upgraded EW stock to an “A” last week. Edwards Lifesciences is a “strong buy” in spite of its triple-digit price tag.
While some home builders have had a tough time this year, NVR (NVR) just keeps building and selling homes.
NVR builds and sells homes under four brands: Ryan Homes, NVHomes, Fox Ridge Homes and Heartland Homes. Ryan Homes and Foxwood Homes cater to first-time buyers as well as move-up buyers. NVHOMES and Fox Ridge handle the higher end of the marketplace. NVR also has a mortgage banking division to help buyers’ finance their homes.
Thanks to its full market coverage, NVR has seen its earnings grow by over 50% so far in 2014. NVR stock’s $1,100-plus price tag may scare some buyers, but Portfolio Grader likes NVR stock and just upgraded it to an “A.” While its nominal price may be high, NVR stock is a “strong buy” right now.
Canadian Pacific Railway (CP)
Railroad stocks have not been exciting since the days of the wild, wild west in the eyes of many investors, but the truth is they are racking up some exciting profits right now. Canadian Pacific Railway (CP) has a transcontinental railway serving both Canada and the U.S.
Canadian Pacific hauls just about everything that can be shipped including commodities, autos, grains, coal and fertilizer products, and business is fantastic these days. Earnings at Canadian Pacific are up over 70% so far in 2014, and analysts expect the strong growth to continue the rest of this year and in 2015.
As conditions have continued to improve, Portfolio Grader upgraded CP stock to an “A” back in July. Canadian Pacific Railway may look expensive at around $200 per share, but the strong fundamentals and continued growth should carry Canadian Pacific Railway price even higher.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.