In many ways it's simply a theoretical quirk that stocks with share prices above $100 are a common feature of U.S. equity markets while it is almost unheard of to have an ASX-listed company with a share price in the triple-digits.
The Warren Buffett-controlled Berkshire Hathaway Inc. is of course an extreme example with one class of its shares costing US$209,222; many other U.S. stocks however sit comfortably in the triple-digit arena, such as Google Inc and IBM Corp, which have share prices of US$550 and US$162 respectively.
When it comes to Australian stocks, there are a small group of leading blue-chips which are all currently vying for the coveted title of "$100 stock."
Leading the race is Commonwealth Bank of Australia (ASX: CBA) which has gained over 4% in the past five trading days to be trading back above $80 a share. With most major bank stocks – except Commonwealth which operates on a June financial year – due to report in the coming week and expectations that record results will be delivered, there could be near term momentum in Commonwealth's stock. However, realistically hitting the $100 mark should be a few years away given growth expectations for the banking industry.
Better Bets
Instead of Australia's largest bank, if I was betting on which stock has significant earnings upside that could lead to major share price growth and see it crack the $100 barrier I'd put my money on the following three stocks…
Macquarie Group Ltd (ASX: MQG) actually cracked the $100 mark back during the boom days of 2007 before the onset of the Global Financial Crisis (GFC). Today the group still has a commanding position in investment banking and a management team that is constantly on the look-out for ways to maximise shareholder value. In time Macquarie Group should be able to further boost its return on equity and with its business leveraged to an improving global economy, the business is well placed to meaningfully grow earnings.
It's not that hard to foresee Macquarie achieving a doubling of earnings over the next five years. If it achieved this, it would also be reasonable to assume the share price could double from its current level of $60.
As CSL Limited (ASX: CSL) proved this week, the biotech has the ability to make large acquisitions such as the US$275 million purchase of Novartis' global influenza vaccine business. The ability to grow through acquisition and the potential to develop blockbuster therapies that can add major new profit lines to the group make a move in the share price from its current $77 to $100 a very real possibility.
Cochlear Limited (ASX: COH) has given shareholders something of a rollercoaster ride over the past few years, however, its business appears to be back on track and investors once again are expecting solid future growth rates to be achieved from the group. With an industry-leading hearing implant product and expansion opportunities into developing nations such as China, Cochlear has the potential to expand sales volumes and grow revenues in a meaningful way. This growth potential could also lead to the stock climbing from current prices around $70 towards the $100 mark over time.
