Some investors make the mistake of assuming a stock’s share price is representative of its quality, but that would be a mistake. There are plenty of high quality $15 stocks, and plenty of lousy $75 stocks.
Value and share price are not the same thing, and in the end it all works out since you are able to purchase more shares of lower-priced stocks to have the end result being the same total dollar amount invested in the underlying security.
For example, there is no difference between buying 100 share of a $15 stock, and 15 shares of a $100 stock. In the end, you wind up with $1,500 invested in the security.
Where price does matter is for investors that like to set up covered call trades. In order to sell a call against your holding, you need to own 100 shares, which is easier to accomplish with lower priced stocks, since the total capital requirements are much lower.
Even if you have no interest in covered calls, it is important to remember that you have to disassociate share price and stock value.
To illustrate that point, we are going to take a look at a handful of high quality stocks that are trading below $20.