Close-up of Nvidia’s emblem on signs at the company’s headquarters… [+] The headquarters of Silicon Valley, Santa Clara, California, on August 17, 2017. (Image courtesy of Smith Collection/Gado/Getty Images)
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Since May 21st, when the firm announced its first stock split in over two decades, Nvidia’s (NASDAQ:NVDA) stock has risen by a stunning 35 percent. While a great set of Q1 earnings and some favorable developments connected to the company’s proposed acquisition of chip manufacturer ARM fueled some of the surge, the stock split is arguably the most important driver of the company’s rally. Following their stock split announcements last year, we witnessed similar trends for Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA). Given that the S&P 500 is up about 90% from its March 2020 lows, and many large-cap stocks are trading around all-time highs, it appears extremely possible that we will see more high-profile stock splits this year. We’ve selected a group of over ten S&P 500 firms with a solid track record of revenue growth and stocks selling at high dollar prices per share, perhaps making them candidates for a stock split in our illustrative theme of Stocks Poised For A Split. Here’s a little additional information on some of the firms and why they’ve outperformed. Alphabet (GOOG) is up nearly 48% year to date, as the company’s core advertising business held up despite Covid-19, and its cloud business continued to grow, with sales up 46% year over year in 2020. The company’s first and only stock split occurred in 2014, and its stock is currently trading at around $2,600.
Year-to-date, Amazon (AMZN) stock has gained around 16 percent as revenue growth quickened, spurred by its e-commerce and cloud operations, which both saw increased demand during Covid-19. The last time Amazon split its stock was roughly two decades ago, and it now trades at around $3,700 per share.
Adobe (ADBE) stock has risen by roughly 25% year to date, as the business benefited from increased digitization and a shift toward cloud products during Covid-19. The company’s most recent stock split occurred in 2005, and its stock now trades for just over $600 per share.
Intuit (INTU), a financial and tax preparation software company, has seen its stock rise by about 33% year to date, owing to better-than-expected quarterly earnings and strong performance by its consumer segment, which is benefiting as more people choose to file their own tax returns rather than visiting an accountant through Covid-19. The company’s last stock split occurred in 2006.
ADDITIONAL INFORMATION [4/27/2021] Candidates for a Stock Split
The S&P 500 has risen by 45 percent in the last year, and several large-cap stocks are currently trading at record highs. We’ve found a group of over ten firms from the S&P 500 that are expanding revenue swiftly and consistently, with their stocks selling at high levels, potentially making them candidates for a stock split, as part of our suggested theme of Stocks Poised For A Split. Although stock splits don’t affect a company’s fundamental picture, they often produce a spike in the stock price after the announcement because investors interpret them as a sign that management believes growth will continue to be strong in the future. Amazon (AMZN), Alphabet (GOOG), and Netflix (NFLX) are among the stocks in our theme (NFLX). Here’s a little additional information about these businesses and how they’ve been doing recently.
The stock of Amazon (AMZN) has risen approximately 5% year to date and around 44% in the last year, as revenue growth surged last year, led by the e-commerce and Amazon Web Services businesses, which saw demand spike through Covid-19. The last time Amazon stock was split was roughly two decades ago, and it now trades at around $3,150 per share. It’s possible that a split may be announced this year, possibly as soon as Thursday when the corporation releases its first-quarter results. [1] Alphabet (GOOG) is up around 18 percent year to date and over 80 percent in the last year, as the company’s core advertising revenue held up despite Covid-19, while its cloud business grew. In 2014, the company conducted its first and only stock split. Currently, the stock is trading for almost $2,300.
The stock of Netflix (NFLX) has increased by roughly 21% in the last year, despite a -6 percent year-to-date drop. Although the stock has lost some momentum as a result of lower-than-expected Q1 subscriber numbers, Netflix’s longer-term prospects are bright, with the business expecting to generate positive free cash flows every year beyond 2021. (See also: Will Netflix Turn Into A Money Machine?) In the past, Netflix has had two stock splits, the most recent in 2015.
For a detailed list of firms and the criteria we used to identify stocks, see our Stocks Poised For A Split topic.
[Updated on December 3, 2020] Candidates for a Stock Split
Many equities are trading near all-time highs as a result of this year’s market boom. With this in mind, high-profile stock splits have resurfaced, with Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) separating their shares in late August. These splits have aided in the rise of prices; for example, Tesla stock has risen nearly twofold after its five-for-one split was announced. Although stock splits don’t change a company’s fundamentals, investors regard them as an indication that growth will continue to be robust in the future. We’ve identified a group of large-cap companies in the S&P 500 that trade at or above $500 per share, have seen strong revenue growth, and have seen significant price appreciation this year, making them prime candidates for future stock splits, according to our indicative theme of Stocks Poised For A Split. While names like Nvidia (NVDA), Amazon (AMZN), Alphabet (GOOG), and Intuitive Surgical (ISRG) were featured in our September update, Align Technology (ALGN), Netflix (NFLX), and Charter Communications have been added (CHTR). Here’s a little additional information on these firms and why they’ve outperformed.
The Invisalign dental aligners are the most well-known product of Align Technology. Despite the Covid-19 pandemic, the company has done well, with sales up 24.9 percent in Q3 2020 compared to last year. Investors have also praised the company’s rapid overseas expansion, with Invisalign shipments outside the United States increasing by 34% in the most recent quarter. [1] The stock is currently trading at around $504.
Netflix stock has also had a strong year, jumping more than 50% year-to-date as the firm added approximately 28 million customers in the first nine months of this year as consumers shunned public entertainment and stayed at home because to the Covid-19 outbreak. Despite the launch of lower-cost services such as Disney+ and Apple TV+, Netflix looks to be confident in its pricing strength, as it boosted pricing on its popular tier in the United States in late October.
Charter Communications, a large telecommunications company, has seen its shares jump 36% year-to-date, owing to strong growth in Internet customers as the work-from-home trend accelerated due to the Coronavirus epidemic. Surprisingly, throughout the last two quarters, the company increased cable TV customers, defying the general trend of cord-cutting.
[As of 9/17/2020] Candidates for a Stock Split
Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) both split their shares late last month, indicating that stock splits are back in vogue this year. Although stock splits don’t change a company’s fundamentals, they often produce a spike in the stock price after the announcement because investors see them as a sign that growth will continue to be robust in the future. We’ve identified a group of large-cap firms in the S&P 500 that have witnessed great growth and price appreciation and could be prime candidates for a future stock split in our suggestive theme of Stocks Poised For A Split. Year to far, the theme has returned around 37%, compared to 5% for the S&P 500. It has gained 113 percent since December 31, 2017, compared to 27 percent for the S&P 500. A little additional information about the firms in our theme can be found below.
Nvidia (NVDA): Nvidia is a company that makes graphics cards. The developer of graphics processing units (GPUs) has seen its shares rise more than 110 percent this year, mainly to rising demand from data centers and its recent acquisition of chip designer ARM. The stock is currently trading at just over $500 and was last split roughly two decades ago.
Amazon (AMZN) last split roughly two decades ago and now trades at over $3,080 per share. The stock has up 67 percent year to date, because to increased demand for its e-commerce and cloud services businesses as a result of the Covid-19 epidemic.
The last stock split for Intuitive Surgical (ISRG), a firm that creates equipment for robotic surgery, was in 2017. The stock is currently trading at over $690, up roughly 17% year to date.
Chipotle Mexican Grill (CMG) stock is currently trading at over $1,260, and the company hasn’t done any stock splits yet. Year to date, the stock has gained roughly 51%.
Google’s parent company, Alphabet (GOOG), had its first and only stock split in 2014, and the stock now trades at over $1,500. Year to date, the stock has gained roughly 13%.
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