When each individual share of a business is priced over $40 it can seem like that the business is expensive. However, the share price is more a reflection of how much the business has grown since it was listed and how many pieces a business has been divided into.
For example, Commonwealth Bank of Australia's (ASX: CBA) share price was $26 in 1999, but the business has grown so much that the share price is $72 today.
Other examples are Cochlear Limited (ASX: COH) and CSL Limited (ASX: CSL) at $124 and $97 respectively.
The companies I've mentioned above have had good growth, but the more a business grows, the harder it is to keep growing at a strong rate. Size is the enemy of returns.
I think the following three businesses still have a lot of growth left, even though they are all above $40 per share.
Blackmores Limited (ASX: BKL)
Blackmores shareholders have been on a rollercoaster over the last few months, but I don't think now is the time to get off the ride.
The business has proven that there's demand for its product with its stellar FY16 results. The first quarter of FY17 may have been a little disappointing but Blackmores could easily get back to growth by FY18.
New products such as baby formula and launching into new markets like Indonesia may be the boost that Blackmores needs.
The market responded positively to the update last week and its shares are already 8.7% higher than the closing-price low of $104.39 on 26 October 2016.
Trading at 19.7x FY16's earnings, Blackmores isn't cheap, but with a grossed up dividend yield of 5.16% it could be worth buying for long-term investors.
REA Group Limited (ASX: REA)
REA Group has grown its business impressively over the last few years. With its recent purchases of a 20% ownership of USA's Move Inc and the takeover of iProperty Group, this gives REA Group plenty of avenues to grow further.
Of course, the bulk of its earnings come from its Australian business. There is an expected apartment crash coming in the next two years according to many economists. Will this affect REA Group? Maybe. It could even be positive if homeowners have to stand out from the crowd with better advertising, using the featured (and more expensive) options on REA Group's website.
Although the market may have been expecting too much from REA Group over the next 6-12 months, I think the current price of $49.35 makes it a good time to buy for long-term investors.
The price/earnings ratio is now down to 25.7 with a grossed up dividend yield of 2.36%. Considering the growth that is likely over the long term, the entry price is looking more attractive.
Macquarie Group Ltd (ASX: MQG)
Macquarie unveiled a fairly positive half-year result recently, growing its dividend by 18.75%. Around 60% of its earnings now come from overseas, which gives Macquarie a large potential market that it can keep expanding into.
It's been working on changing its business to be less cyclical, with its self-described 'annuity-style businesses'. I think this is a good move and should make Macquarie's performance more reliable.
Over the long term the growth of superannuation, global markets and Macquarie's asset management business should see it continue to be a winner.
Macquarie currently has a partially franked dividend yield of 5.5% and is trading with a price/earnings ratio of 12.75.
Foolish takeaway
Just because a business has a high share price doesn't mean it's expensive, it also doesn't mean that the share price can't continue growing. For an extreme example, just look at Berkshire Hathaway shares at US$215,370 per share. Share prices can keep growing beyond $100 or even $1,000 if a company has long term success.
Out of the three above businesses, I prefer REA Group for its global footprint, expected growth and its market-leading websites which are backed by News Corp (ASX: NWS).
There may be a lower entry price in the weeks and months to come, but as long as you invest Foolishly by thinking long term, then volatility is your friend and not your enemy.
