5 high-priced stocks worth every cent

Don't let a share price above $200 scare you off.

By InvestorPlace Jan 19, 2012 12:03PM
Image: Wealthy couple celebrating in a car (© Image Source/Getty Images)By Jeff Reeves

There are some low-priced stocks out there that really catch Wall Street's fancy. There's some kind of love affair with a cheap stock -- with investors fooling themselves into thinking that it's easier for a $1 stock to get to $2 than it is for a $100 stock to get to $200.

But the bottom line is still the bottom line. A stock succeeds or fails on the merit of its business, not on logistical nonsense like shares outstanding or the headline price of the stock.

Take the 50-to-1 stock split that Berkshire Hathaway (BRK.B) executed in 2009 to bring its "Baby B" stock down from more than $3,000 a pop to a manageable amount under $100 per share. Did it change the company? Did Warren Buffett become any smarter or dumber as a result?

And on a more basic level, you make the same amount of money owning one share of a $3,000 stock as you do with 3,000 shares of a $1 stock. Either way, you have the same amount of money invested -- it's just divided differently.

So if you're afraid of high-priced stocks or in love with bargain picks, take a moment to consider these five picks with $200-plus price tags -- and the potential to move even higher:

Intuitive Surgical (ISRG) makes the innovative da Vinci surgical systems that have revolutionized operations used to treat cancer and heart disease, among other things. Without getting too technical, Intuitive Surgical gear allows doctors to operate on a patient with fewer incisions, speeding up recovery time and reducing the risk of complications. ISRG is up 400% in five years -- taking the recession in stride thanks to powerful growth as its technology has caught on and as aging baby boomers create increased demand for surgeries. The company has seen nine straight quarters of year-over-year profit increases and has seen a streak of revenue increases even longer than that. Health care is one of the few growth areas in the American economy, and ISRG is well positioned to capitalize on this trend.

Apple (AAPL) is the $400 gorilla of Wall Street that dares you to bet against it. Yeah, shares dropped 15% from October to November -- but Apple has bounced back in a big way, hitting an all-time high Wednesday, and seems ready to move even higher. The iPad 3 could come as recently as February, if you believe the rumors, and Apple clearly is looking to maintain its stranglehold on the tablet market. Wall Street is admittedly ga-ga for Apple, so you have to beware of the hype. Still, a forward price-to-earnings ratio of less than 11 hints that there still is time to buy Apple for the continued march upward.

MasterCard (MA) is at the center of a macro trend that is tough to ignore: the death of paper money. Per-swipe transactions continue to rise even in America, since as much as 40% of transactions in the U.S. still take place with cash or paper checks. But the real growth for MasterCard is coming from emerging markets, where a rising middle class is getting access to bank accounts and debit cards. Remember, MasterCard is not a debt issuer, but more of a toll-taker on the e-commerce superhighway. Every time you make a purchase, MasterCard gets paid -- and it's hard to believe that the number of people using plastic is going to decline anytime soon.

Priceline (PCLN) has taken over the travel business with an innovative "name your own price" model for airfares, hotels, rental cars and a host of other services. However, the real growth isn't at home from people booking trips to Florida to see the grandparents -- it's internationally. PCLN offers hotel room reservations in about 100 countries and more than 40 languages. That has allowed for big growth despite the fact that Priceline is competing with internet travel sites like Kayak that have popped up in recent years. Profits are on track to double from 2010 to 2011, and grow an additional 25% in 2012.

W.W. Grainger (GWW) is a rather un-sexy company when compared to the others on this list. It is engaged in "facilities maintenance," a glorified way to refer to distributing pumps, tools, motors and other gear that allow businesses to … well, do business. That might not sound exciting, but a 60% surge in GWW stock since the summer is worth taking note of. The company has seen eight consecutive quarters of year-over-year revenue increases. EPS numbers jumped 29% from 2010 to 2011 and are set to surge another 17% in 2012. W.W. Grainger is expanding in China and Panama, too, which could add even more momentum to shares. You might want to wait for a pullback after the red-hot run recently, however.

Tired of hearing about the stocks most likely to put a hole in your wallet? Then don't miss out on the 3 under-$10 stocks that are screaming buys.

Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace​​.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.

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Jan 19, 2012 3:14PM
Smile Apple - priced to perfection allowing for growth through 2012 but there's storm clouds on the horizon with Android phones and tablets taking market share and the Microsoft/Nokia partnership for Windows phones starting to produce really good products. Microsoft's Windows 8 will further complicate 2012 after June and the mobile market will succumb to more choices and falling prices.
Jan 19, 2012 5:27PM

The first time a new product from Apple doesn't sell extremely well the stock is going to tank. Sooner or later someone always thinks up a new and better product.

Jan 20, 2012 8:17AM
Jeff, in a 10/26/2010 blog, you listed five Dow stocks to not buy now.  Since then those five stocks are up 8.6% while the Dow is up only 6.4%.

Looking at the stocks on your list, you sound more like an activist than a reporter.  Aren't you ready to retract your blog?
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