Only a handful of stocks have a price of more than $100 per share. Several of these high-priced stocks have been delivering reliable, market-leading returns for years.
Here are three high-priced stocks worthy of your attention.
Shopify Inc (TSX: SHOP)(NYSE:SHOP)
When it IPO’d in 2015, Shopify shares were priced at just $35 apiece. This week, the stock surpassed $300 per share.
The fundamentals clearly support the dramatic rise. In 2015, revenues came in around $200 million. Last year, they hit $1 billion.
Still, Shopify remains unprofitable. In 2018, it lost $65 million dollars. Ramping competition could make the transition to profitability even harder.
Recently, multiple tech giants have entered Shopify’s market, including Square, Microsoft, and Facebook. I wrote recently that “Shopify’s valuation seems to be pricing in limited competition and zero pricing pressures.” Competition will likely become fierce this year, and prices should fall in response.
Still, Shopify is a well-run company in a $46 billion industry. Shares are pricey, but if there’s a market correction, this should be at the top of your watch list.
Canadian Tire Corporation Limited (TSX: CTC.A)
Canadian Tire doesn’t get as much attention as Shopify, but it should.
In 1998, shares were trading for just $12. Last week, shares surpassed $150. Plus, investors now enjoy a 2.8% dividend.
Over the last five years, the dividend has risen from $1.75 per share $4.15 per share, an increase of nearly 150%. The company’s commitment to growing shareholder value should help investors sleep soundly.
Now trading at just 14 times earnings, Canadian Tire’s valuation doesn’t reflect its strong history of execution. Its business should see some pressure from digital competition, but many of its items are still mostly purchased in physical stores, such as power tools, outdoor furniture, and barbecue equipment.
Canadian Tire stock will likely never double overnight, but it’s a proven, long-term winner trading at a reasonable price.
Canadian Pacific Railway Ltd (TSX: CP)(NYSE: CP)
Trading at 22 times earnings, Canadian Pacific stock is pricey, but for good reason.
Last quarter, revenues surpassed $2 billion for the first time, representing a 17% jump year over year. Continued transportation bottlenecks in Alberta should provide a long runway of profitable growth.
Last fall, Alberta instituted mandatory production cuts for local oil producers. Burgeoning supply was overloading local pipeline capacity. To relieve pressure, many producers exported their output via rail, but that capacity was finite as well.
While some investors expect the supply glut to clear up this year, I’ve argued that it will likely persist for years to come. With transportation capacity in Edmonton, Calgary, Scotford, and Coutts, Canadian Pacific can use these troubles to its advantage.
With limited options for shipping their output, oil companies have proven willing to pay a steep premium to utilize crude-by-rail. This demand has been a reliable growth driver for Canadian Pacific, and judging by current conditions, the company should be able to capitalize again in 2019 and beyond.
