Price vs Value
- A $2 stock can cost you more than a $20 stock.
- If you look at earnings relative to share price, a $2 can cost you more in terms of earnings per share than a higher priced stock. (Reference P/E ratio video)
- The number of outstanding shares can impact your percentage of ownership and how much control you have in the company (more shares outstanding = a lesser percentage of ownership per share)
- Ownership has a direct relation to your claim on earnings when distributed through dividends.
- Stock pricing is not an apples to apples game. Looking below the surface of share price can expose the true value of each share you’re buying.