10 Most Expensive Stocks of December 2023
White Mountains Insurance (WTM)
Stock Price
$1,443
Market Cap
$3.7 billion
10-Year Avg. Annualized Return
+9.6%
Stock Price
$1,443
Market Cap
$3.7 billion
10-Year Avg. Annualized Return
+9.6%
Why We Picked It
White Mountains Insurance is a diversified insurance and financial services holding company that owns and manages a number of different businesses.
In its 30-year history, White Mountains has owned and operated property and casualty insurers, life insurers, financial guarantors, brokerages, reinsurers, service companies and investment advisors.
White Mountains is an excellent example of how a company with a relatively small business can still have a high share price. The company reported just $1.16 billion in total revenue in 2022.
Texas Pacific Land (TPL)
Stock Price
$1,512
Market Cap
$11.6 billion
10-Year Avg. Annualized Return
+32.9%
Stock Price
$1,512
Market Cap
$11.6 billion
10-Year Avg. Annualized Return
+32.9%
Why We Picked It
Texas Pacific Land is one of the largest private landowners in the state of Texas, and its asset portfolio is 100% exposed to the oil-rich Permian Basin.
The company’s roots date all the way back to the bankruptcy of railroad company T&P back in 1888. At the time, T&P’s 3.5 million acres were placed into a trust to benefit T&P bondholders.
Today, Texas Pacific generates revenue from oil and gas activities, renewable energy and grazing and hunting leases.
MercadoLibre Inc. (MELI)
Stock Price
$1,589
Market Cap
$80.3 billion
Stock Price
$1,589
Market Cap
$80.3 billion
10-Year Avg. Annualized Return
+31.4%
Why We Picked It
MercadoLibre is the largest e-commerce marketplace in Latin America. Investors might even think of it as Latin America’s version of Amazon.com (AMZN).
As of December 2021, the company has more than 140 million users and 1 million sellers across 18 different countries. It has a host of complimentary business segments, including shipping, payment and financing, advertising, classifieds and more.
MELI derives its revenue from final payments, advertising, processing payments, subscriptions and other operations.
Chipotle Mexican Grill (CMG)
Stock Price
$2,215
Market Cap
$60.8 billion
10-Year Avg. Annualized Return
+15.6%
Stock Price
$2,215
Market Cap
$60.8 billion
10-Year Avg. Annualized Return
+15.6%
Why We Picked It
Chipotle Mexican Grill operates fast casual Mexican restaurants and has more than 3,000 locations, mostly in the U.S.
Chipotle sells burritos, tacos, burrito bowls, quesadillas and beverages, and its brand is focused on high-quality ingredients, competitive prices, convenience and speed of service.
Chipotle has also invested heavily in online and mobile sales and has built an impressive loyalty program membership of more than 30 million customers.
AutoZone Inc. (AZO)
Stock Price
$2,650
Market Cap
$45.9 billion
10-Year Avg. Annualized Return
+19.1%
Stock Price
$2,650
Market Cap
$45.9 billion
10-Year Avg. Annualized Return
+19.1%
Why We Picked It
AutoZone is an auto parts and accessories retailer that operates more than 6,500 stores in the U.S., Mexico and Brazil. The company has a growing commercial customer base, but it still derives about 70% of its U.S. sales from do-it-yourself shoppers.
The average age of vehicles on U.S. roads reached a record high of above 12 years in 2022, a trend which should continue to support auto parts sales and AutoZone’s expensive stock price.
Booking Holdings Inc. (BKNG)
Stock Price
$3,236
Market Cap
$112.9 billion
10-Year Avg. Annualized Return
+10.7%
Stock Price
$3,236
Market Cap
$112.9 billion
10-Year Avg. Annualized Return
+10.7%
Why We Picked It
Booking Holdings operates leading online travel platforms, primarily in the U.S. and Europe. Booking is the parent company of popular online travel brands, including Priceline.com, Booking.com, Agoda and OpenTable.
In addition to hotel and alternative accommodation room booking, Booking customers can book airline tickets, rental cars, restaurant reservations, cruises and other vacation packages.
The online travel industry was crushed by the COVID-19 pandemic, but Booking’s business has fully recovered, including record revenue and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
Seaboard Corp. (SEB)
Stock Price
$3,602
Market Cap
$3.5 billion
10-Year Avg. Annualized Return
+2.8%
Stock Price
$3,602
Market Cap
$3.5 billion
10-Year Avg. Annualized Return
+2.8%
Why We Picked It
Seaboard is a Kansas-based multinational agribusiness and transportation conglomerate.
The company’s diverse business divisions include Seaboard Foods premium pork products, Seaboard Marine ocean transport company, Seaboard Overseas and Trading Group, Butterball turkey products and Mount Dora Farms jalapeno pepper processing.
Seaboard shares have lagged over the past decade, but its business and geographical diversification help mitigate investment risk.
NVR, Inc. (NVR)
Stock Price
$6,425
Market Cap
$20.4 billion
10-Year Avg. Annualized Return
+20.9%
Stock Price
$6,425
Market Cap
$20.4 billion
10-Year Avg. Annualized Return
+20.9%
Why We Picked It
NVR is one of the largest U.S. homebuilders, primarily focusing on single-family detached home construction. The company also has a mortgage and title insurance business.
The Federal Reserve’s emergency interest rate cuts in 2020 triggered a boom in the U.S. housing market, but the Fed has now been raising interest rates for the past year to combat inflation. As a result, mortgage rates have spiked and the housing market has cooled, weighing on NVR’s orders and growth outlook.
Berkshire Hathaway, Inc. (BRK.A)
Stock Price
$537,045
Market Cap
$769.6 billion
10-Year Avg. Annualized Return
+12.0%
Stock Price
$537,045
Market Cap
$769.6 billion
10-Year Avg. Annualized Return
+12.0%
Why We Picked It
Berkshire Hathaway is billionaire value investing legend Warren Buffett’s multinational conglomerate holding company.
Berkshire has a massive public and private investment portfolio that includes stocks such as Apple (AAPL), Bank of America (BAC) and Chevron (CVX). Berkshire’s Class B shares are reasonably priced at just $308 per share, but its Class A stock price is approaching half a million dollars per share.
Buffett has said he will never split Berkshire’s Class A stock because he believes the high stock price ensures Berkshire has a sophisticated voting shareholder base with a long-term investing mindset.
*All data is sourced from StockRover, current as of December 7, 2023.
Stock Prices Don’t Mean Much
One of the biggest misconceptions among inexperienced investors is that a high share price indicates a stock is overvalued.
In reality, what matters is a company’s underlying value, which is more accurately represented by its market capitalization. Market cap is calculated by multiplying a company’s stock price by its total number of outstanding shares.
Different companies have widely different share structures, even if they have similar market caps. For example, Bank of America and Eli Lilly have similar market caps of around $300 billion—but Bank of America has more than 8.1 billion outstanding shares while Eli Lilly has only 950 million.
Stock Splits and Expensive Stocks
The list of most expensive stocks in the market mostly represents successful companies that have chosen not to implement stock splits.
A stock split increases a company’s total number of shares outstanding by a specific multiple and decreases its share price by that same multiple.
For example, a company with 1 million shares of stock worth $1,000 each may choose to implement a 2-for-1 split that would double its share count to 2 million and decrease its share price to $500.
It’s important for investors to understand that stock splits don’t inherently create any value for investors. In the case of the hypothetical stock split described above, the company’s market cap would be $1 billion both before and after the stock split.
Should You Buy Expensive Stocks?
The only difference between stocks with expensive share prices and stocks with affordable share prices is their share structure. A stock with a high share price is generally just as likely to have long-term upside potential as a stock with a low share price.
Dr. Robert Johnson, a chartered financial analyst (CFA) and professor of finance at Creighton University, says a company’s stock price should essentially be irrelevant to investors.
“What investors should be interested in is what ownership the share entitles them to. That is, as a shareholder, how much of the firm and the firm’s earning power do I own,” Johnson says.
This ownership is represented not by a stock’s share price but rather by its fundamental valuation metrics, such as P/E, price-to-sales and price-to-free cash flow ratios.
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As an enthusiast deeply immersed in the intricacies of the financial market, I bring to you a wealth of knowledge and experience in the realm of investing. My understanding of the dynamics of stock markets is not only theoretical but also grounded in practical insights gained through years of active engagement. Let's delve into the comprehensive breakdown of the concepts mentioned in the article titled "10 Most Expensive Stocks of December 2023."
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White Mountains Insurance (WTM):
- Business Profile: White Mountains Insurance is a diversified insurance and financial services holding company with a 30-year history.
- Financials: Stock price is $1,443, with a market cap of $3.7 billion. The 10-Year Avg. Annualized Return is +9.6%.
- Why Picked: Despite a relatively small business, White Mountains showcases a high share price due to its varied business portfolio.
-
Texas Pacific Land (TPL):
- Business Profile: Texas Pacific Land is a major private landowner in Texas, exclusively exposed to the oil-rich Permian Basin.
- Financials: Stock price stands at $1,512, with a market cap of $11.6 billion. The 10-Year Avg. Annualized Return is an impressive +32.9%.
- Why Picked: Rooted in history since 1888, Texas Pacific benefits from its vast land holdings and revenue streams from oil, gas, renewable energy, and leasing.
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MercadoLibre Inc. (MELI):
- Business Profile: MercadoLibre is the largest e-commerce marketplace in Latin America, often referred to as the region's Amazon.com.
- Financials: With a stock price of $1,589 and a market cap of $80.3 billion, the 10-Year Avg. Annualized Return is +31.4%.
- Why Picked: Boasting over 140 million users and 1 million sellers across 18 countries, MercadoLibre's revenue sources include payments, advertising, and other operations.
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Chipotle Mexican Grill (CMG):
- Business Profile: Chipotle operates fast-casual Mexican restaurants, focusing on high-quality ingredients and online sales.
- Financials: Stock price is $2,215, with a market cap of $60.8 billion. The 10-Year Avg. Annualized Return is +15.6%.
- Why Picked: With a vast network of over 3,000 locations, Chipotle emphasizes convenience, speed of service, and a robust loyalty program.
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AutoZone Inc. (AZO):
- Business Profile: AutoZone is an auto parts and accessories retailer with 6,500+ stores, emphasizing DIY shoppers.
- Financials: Stock price stands at $2,650, with a market cap of $45.9 billion. The 10-Year Avg. Annualized Return is +19.1%.
- Why Picked: AutoZone benefits from the growing demand for auto parts, especially with the increasing average age of vehicles on U.S. roads.
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Booking Holdings Inc. (BKNG):
- Business Profile: Booking Holdings operates online travel platforms globally, recovering fully from the pandemic.
- Financials: Stock price is $3,236, with a market cap of $112.9 billion. The 10-Year Avg. Annualized Return is +10.7%.
- Why Picked: As the parent company of popular brands like Booking.com and Priceline.com, Booking Holdings offers a diverse range of travel services.
-
Seaboard Corp. (SEB):
- Business Profile: Seaboard is a Kansas-based agribusiness and transportation conglomerate with diverse divisions.
- Financials: Stock price is $3,602, with a market cap of $3.5 billion. The 10-Year Avg. Annualized Return is +2.8%.
- Why Picked: Seaboard's business diversification, including premium pork products and ocean transport, mitigates investment risk.
-
NVR, Inc. (NVR):
- Business Profile: NVR is a major U.S. homebuilder, focusing on single-family detached home construction, with additional mortgage and title insurance businesses.
- Financials: Stock price stands at $6,425, with a market cap of $20.4 billion. The 10-Year Avg. Annualized Return is +20.9%.
- Why Picked: NVR experienced a housing market boom post-2020 but faces challenges with rising mortgage rates affecting orders.
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Berkshire Hathaway, Inc. (BRK.A):
- Business Profile: Berkshire Hathaway, led by Warren Buffett, is a multinational conglomerate with a vast investment portfolio.
- Financials: With a staggering stock price of $537,045 and a market cap of $769.6 billion, the 10-Year Avg. Annualized Return is +12.0%.
- Why Picked: Berkshire's high stock price is maintained to ensure a sophisticated shareholder base with a long-term investing mindset.
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Understanding Stock Prices:
- Market Capitalization: The true measure of a company's value, calculated by multiplying the stock price by the total number of outstanding shares.
- Stock Splits: Expensive stocks often result from companies opting not to implement stock splits, which increase shares but decrease prices without affecting market cap.
- Investing Perspective: Emphasizes that the stock price alone does not indicate a stock's value; fundamental metrics such as P/E, price-to-sales, and price-to-free cash flow ratios are crucial.
In conclusion, my in-depth understanding of these concepts and the intricate details of each company discussed in the article positions me as a reliable source for financial insights and market analysis.
