A company's stock price is not a direct reflection of its value in any absolute sense. Because share prices are influenced by outstanding share counts, a $1,000 stock could easily have a lower market capitalization than a stock valued at $20 per share. That's true in the same way that cutting a pizza into more slices doesn't leave you with more pizza.
Still, share prices matter for several reasons, including the fact that it's easier to initiate a position in relatively cheaper stocks. With that flexibility in mind, let's look at a few stocks priced under $100 today that have attractive growth and earnings profiles. Read on for some good reasons to buy Shopify (SHOP -2.37%) and McCormick (MKC 1.11%) today.
1. Shopify: Taking a new path
If 2022 was about investing heavily in e-commerce fulfillment infrastructure, this year is partly about unwinding some of that costly spending. Big industry players including Amazon and Wayfair are busy lowering these expenses today.
Shopify, meanwhile, caught Wall Street's attention in May when it announced it was exiting the business entirely by breaking off its logistics arm to focus on its core marketplace platform.
This move will likely accelerate its return to profitability, but there are more concrete reasons to like this stock right now. Shopify reported solid-sales volume growth in the most recent quarter, in part thanks to rising demand for international sales. Overall, revenue was up 27%, in part thanks to rising seller fees .
Merchants are also choosing to rely on Shopify for more services, which is a great sign for the company's long-term ambitions. And the stock is priced well below $100 per share even following its recent rally.
2. McCormick: Packed with flavor
McCormick stock has been rising in anticipation of improving earnings trends in 2023. After all, the spices and flavorings giant's 2022 results were pressured by temporary challenges like supply chain issues and surging inflation. These factors are lessening in severity just as McCormick's price increases are beginning to boost the business.
As a result, look for the company to report stronger gross- and operating-profit margins in its upcoming earnings announcement in late June. Management might also adjust its fiscal-year outlook that currently calls for sales to rise by between 5% and 7%, while operating profit improves by as much as 12%. Toss in a steadily rising dividend that is yielding about 1.8%, and you have many ingredients required for market-beating stock returns.
McCormick is valued at 3.9 times annual sales today, which is a richer valuation than PepsiCo's price-to-sales (P/S) ratio of about 2.9. But the company is more profitable and has a clear shot at expanding that profit-margin lead over the next few years.
Shares are priced at around $90 each right now, down from all-time highs in early 2022 of just over $100.
The company's dominant position in attractive consumer staples niches like sauces and condiments should help it deliver excellent returns for investors seeking a balance between growth and income.
