The S&P 500 (INDEXSP:.INX) has been hitting record highs lately, leading some to wonder whether the stock market is overpriced. Looking at individual components of the S&P 500 (INDEXSP:.INX), it’s easy to find some stocks with exceedingly high share prices.
Of course, share price alone doesn’t determine a company’s value. You also have to consider how many shares a company has outstanding. Perhaps the most obvious example is Berkshire Hathaway Inc. (NYSE:BRK.A), whose A shares fetch almost $170,000. Yet because it only has about 1.65 million shares outstanding, compared with the billions that most big companies have, Berkshire Hathaway Inc. (NYSE:BRK.A)’s total market cap, while impressive, is still not the highest in the market. In addition, only once the company issued its B shares, which are worth a bit more than $110 each, did Standard & Poor’s give Berkshire Hathaway Inc. (NYSE:BRK.A) admittance to the index.
Regardless, a high share price typically indicates that a stock has performed well. So with that in mind, let’s take a closer look at the four stocks in the S&P 500 (INDEXSP:.INX) that have the most expensive shares.
4. Intuitive Surgical, Inc. (NASDAQ:ISRG), $484
Robotic-surgery pioneer Intuitive Surgical from $14 a decade ago to its current lofty levels. With its da Vinci surgical system, Intuitive Surgical, Inc. (NASDAQ:ISRG) has opened up new frontiers in medicine and spurred competitors to build robotic systems of their own.
Intuitive Surgical, Inc. (NASDAQ:ISRG)’s stock actually came close to the $600 mark earlier this year, but recently concerns about the safety of robotic surgery have weighed on the stock. With an FDA investigation ongoing, investors might not feel confident about the company’s prospects until it’s cleared of any safety concerns. If the company can remedy any potential problems, however, Intuitive has plenty of upside growth potential left in its future.
3. Mastercard Inc (NYSE:MA), $585
The card-network giant is No. 2 in its industry, but MasterCard’s share price has soared since its 2006 IPO at $39 per share. By moving beyond its original credit card focus to be a first-mover in debit cards and, more recently, mobile payment technology, Mastercard Inc (NYSE:MA) has done its best to defend its lucrative turf as a gatekeeper for millions of customers seeking to move money around the world.
High earnings multiples have some investors worried about whether the company can sustain fast-enough growth to justify the current share price. But with the stock having consistently hit new record highs since late 2011, Mastercard Inc (NYSE:MA) has recovered from the challenges of the financial crisis and appears to have a lot further to go.