Stock splits attract quite quite a lot of attention amongst investors.
While they don’t change the fundamentals of a stock, they do act as a signal from management that it expects the stock to keep up moving higher. That’s because stock splits represent milestones in a stock’s growth, they sometimes make the value of an individual share cheaper, making it cheaper for retail investors.
There’s also some evidence that stocks outperform after a stock split, which is also attributable to the momentum from growth inside the stock that led to the split and confidence from management that the stock will proceed to maneuver higher.
In case you’re looking out for the next stock-split stocks, listed listed below are three that might possibly be next.
1. Booking Holdings
Booking Holdings (NASDAQ: BKNG) is the most important online travel agency on the planet, and it’s never had a stock split in its history, though it did do a reverse split in 2003 when it was on the purpose of bankruptcy after the dot-com bubble burst.
Since then, Booking shares have skyrocketed, and its share price is now approaching $4,000 a share, making it higher than another U.S. stock apart from homebuilder NVR and Berkshire Hathaway Class A shares.
CEO Glenn Fogel recently tamped down expectations of a stock split as many other high-priced stocks have split their shares. In an interview with Barron’s, he responded to a matter a number of prospective stock split, saying, “I don’t think I would really like that style of investor.”
Fogel’s not alone in that sentiment. Amazon founder Jeff Bezos also dismissed the concerns of short-term investors, insisting he was focused on the long term. Nonetheless, Amazon eventually split its shares after Bezos passed the torch to current CEO Andy Jassy.
Despite Fogel’s comment, a Booking stock split seems increasingly likely if the share price continues to rise.
2. AutoZone
AutoZone (NYSE: AZO) can be considered one of the crucial expensive stocks within the marketplace on an individual share price basis, and, like Booking, it has been a longtime outperformer.
AutoZone and rival O’Reilly Automotive have long delivered outsize returns by adding latest stores and serving a growing marketplace for aftermarket auto parts, especially as the standard age of a vehicle on the road is now greater than 12 years.
AutoZone stock now trades at greater than $3,000 a share. The company hasn’t split its stock since 1994 and since then, the stock is up by roughly 42,000%.
The auto parts stock has also gained steadily in the course of the last five years during a volatile stock market, showing the strength of its recession-proof business model.
The company hasn’t announced any plans for a stock split, nonetheless it will make sense to do one, especially for the rationale that stock seems well positioned to keep up gaining.
3. MercadoLibre
Finally, MercadoLibre (NASDAQ: MELI) also looks like a superb candidate for a stock split. The Latin American e-commerce leader just crossed $2,000 a share, and like the alternative stock on the list, has been a consistent winner on the stock market.
MercadoLibre has grown over time by expanding its business right right into a third-party marketplace, digital payments network, logistics service, and lending business.
While MercadoLibre seems to have been eligible for a stock split for a while based on its share price, which has been over $1,000 for most of the last five years, the company has never split its share price in its history, which works back to its IPO in 2007.
MercadoLibre hasn’t commented on a stock split, nonetheless it seems more more likely to occur if the stock keeps gaining. The company stays to be growing rapidly and margins are expanding, setting the highest off for more gains.
Don’t be surprised to see MercadoLibre split its stock within the approaching years, if not sooner.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of directors. Jeremy Bowman has positions in Amazon and MercadoLibre. The Motley Idiot has positions in and recommends Amazon, Berkshire Hathaway, Booking Holdings, MercadoLibre, and NVR. The Motley Idiot has a disclosure policy.
Stock-Split Watch: 3 Top Stocks That Look Capable of Split was originally published by The Motley Idiot