Closeup of signage with logo for computer graphics hardware manufacturer Nvidia at the company’s … [+]
Nvidia (NASDAQ:NVDA) stock rallied by a whopping 35% since May 21st when the company announced its first stock split in nearly two decades. While a part of the rally was driven by a strong set of Q1 earnings and some positive developments related to the company’s proposed acquisition of chip designer ARM, the stock split is likely the biggest driver of the company’s rally. We saw similar trends for Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) post their stock split announcements last year. Now, it’s looking very likely that we will see more high-profile stock splits this year, considering that the S&P 500 is up almost 90% from the lows of March 2020, with many large-cap names trading around their all-time highs. In our indicative theme of Stocks Poised For A Split, we’ve identified a group of over ten companies from the S&P 500 with a strong track record of revenue growth, with their stocks also trading at high dollar prices per share, potentially making them candidates for a stock split. Below is a bit more about some of the companies and why they’ve been outperforming.
Alphabet (GOOG) is up by about 48% year-to-date, as the company’s core advertising business held up despite Covid-19, while its cloud business continued to gain traction, with sales rising 46% year-over-year in 2020. The company carried out its first and only stock split in 2014, with its stock trading at about $2,600 presently.
Amazon (AMZN) stock gained about 16% year-to-date as revenue growth accelerated led by its e-commerce and cloud businesses which both saw demand surge through Covid-19. Amazon carried out its last split around two decades ago and currently trades at around $3,700 per share.
Adobe (ADBE) stock has rallied by about 25% year-to-date, as greater digitization and a shift toward cloud offerings proved beneficial to the company through Covid-19. The company carried out its last stock split in 2005, and its stock now trades at a little over $600 per share.
Intuit (INTU), a company that specializes in financial and tax preparation software, has seen its stock rally by about 33% year-to-date, driven by stronger than expected quarterly earnings and a strong performance by its consumer segment, which is benefiting as more people opt for filing tax returns on their own, rather than visiting an accountant through Covid-19. The company carried out its last stock split in 2006.
[4/27/2021] Stock Split Candidates
The S&P 500 is up a solid 45% over the last year and many large-cap stocks are now trading near all-time highs. In our indicative theme of Stocks Poised For A Split, we’ve identified a group of over ten companies from the S&P 500 that are growing revenue quickly and consistently, with their stocks trading at high prices, potentially making them candidates for a stock split. Now, although splits don’t change the fundamental picture for a company, they typically cause a run-up in the stock price post-announcement as investors see them as a signal that management is confident that growth will remain strong going forward. Stocks in our theme include Amazon (AMZN), Alphabet (GOOG), and Netflix (NFLX). Below is a bit more about these companies and how they’ve been faring recently.
Amazon (AMZN) stock has gained about 5% year-to-date and about 44% over the last 12 months, as revenue growth accelerated over the last year led by the e-commerce and Amazon Web Services businesses which saw demand surge through Covid-19. Amazon stock saw its last split about two decades ago and currently trades at around $3,150 per share. There is speculation that a split could be announced this year, potentially as early as Thursday when the company reports Q1 results. [1]Alphabet (GOOG) is up by about 18% year-to-date and by about 80% over the last 12 months, as the company’s core advertising business held up despite Covid-19, while its cloud business continued to gain traction. The company carried out its first and only stock split in 2014. The stock trades at over $2,300 presently.
Netflix (NFLX) stock has gained about 21% over the last 12 months, although it has declined by about -6% year-to-date. Although the stock appears to have lost some momentum, on account of weaker than expected Q1 subscriber figures, the longer-term outlook for Netflix is strong, as the company expects to generate positive free cash flows for every year after 2021. (Related: Will Netflix Become A Cash Machine?) Netflix has seen two stock splits in the past, the most recent being in 2015.
See our theme on Stocks Poised For A Split for a complete list of companies and the criteria we’ve used to pick stocks.
[Updated 12/3/2020] Stock Split Candidates
With the big market rally this year, many stocks are trading at around all-time highs. Considering this, high-profile stock splits have made a comeback, with Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) splitting their shares in late August. These splits have helped to drive prices higher, for perspective Tesla stock has soared by almost 2x since its five for one split was announced. Although splits don’t change the fundamentals of a company, investors see them as a sign that growth could remain strong going forward. In our indicative theme of Stocks Poised For A Split, we’ve identified a group of large-cap companies in the S&P 500 that trade at above $500 per share, have seen strong revenue growth and significant price appreciation this year, making them prime candidates for future stock splits. While our last update in September included Nvidia (NVDA), Amazon (AMZN), Alphabet (GOOG) , and Intuitive Surgical (ISRG), names that have been added include Align Technology (ALGN), Netflix (NFLX), and Charter Communications (CHTR). Below is a bit more about these companies and why they’ve been outperforming.
Align Technology is a company best known for its Invisalign dental aligners. The company has fared well despite the Covid-19 pandemic, with its Q3 2020 sales soaring by about 24.9% versus last year. Investors have also been cheering the company’s quick international expansion, with Invisalign shipments outside the U.S growing 34% last quarter. [1] The stock trades at about $504.
Netflix stock has also had a solid run, rising by over 50% year-to-date, as the company added about 28 million subscribers over the first nine months of this year, as people avoided public forms of entertainment and stayed home through the Covid-19 pandemic. Netflix also appears confident about its pricing power, despite the launch of lower-priced services such as Disney+ and Apple TV+, as it raised pricing on its popular tier in the U.S in late October.
Charter Communications, a major telecommunications provider, has seen its stock rise by 36% year-to-date driven by robust growth in Internet subscribers as the work and learn from home trend accelerated through the Coronavirus pandemic. Interestingly, the company also added cable TV customers over the last two quarters, defying the broader trend of cord-cutting.
[Updated 9/17/2020] Stock Split Candidates
Stock splits are back in favor this year, with Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) splitting their shares late last month. Although splits don’t change the fundamentals of a company, they often cause a run-up in the stock price post-announcement as investors see them as a signal that growth could remain strong going forward. In our indicative theme of Stocks Poised For A Split we’ve identified a group of large-cap companies in the S&P 500 that have seen strong growth and price appreciation that could be prime candidates for a future stock split. The theme has returned about 37% year-to-date, versus 5% for the S&P 500. It remains up 113% since 12/31/2017 vs. 27% for the S&P. Below is a bit more about the companies in our theme.
Nvidia (NVDA): The maker of graphic processing units (GPUs) has seen its stock soar over 110% this year, driven by growing demand from data centers and its recent deal to buy chip designer ARM. The stock trades at a little over $500 and saw its last split about two decades ago.
Amazon (AMZN) also saw its last split about two decades ago and currently trades at around $3,080. The stock is up by 67% year-to-date, as the Covid-19 pandemic caused demand for its e-commerce and cloud services business to surge.
Intuitive Surgical (ISRG) a company that develops products for robotic surgeries carried out its last stock split in 2017. The stock trades at about $690 currently and is up by about 17% year-to-date.
Chipotle Mexican Grill (CMG) stock trades at over $1,260 presently and the company hasn’t done any splits to date. The stock is up by about 51% year-to-date.
Alphabet (GOOG) Google’s parent company carried out its first and only stock split in 2014 and the stock trades at over $1,500 presently. The stock is up by around 13% year-to-date.
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