6 High-Priced Stocks Worth the Cost
(Kiplinger) — Value is determined by comparing a stock’s price to such fundamental measures as earnings, revenues or book value (assets minus liabilities). So if a stock trades at $10 and the underlying company has earned 20 cents a share, the stock sells at 50 times earnings. Compare that with a $100 stock that trades at ten times earnings of $10 per share. In terms of true value, the $100 stock is the cheaper of the two (although that doesn’t necessarily mean it will perform better in the future).
