Always keep an eye on stock splits.
While splits don’t change the value of a stock, they can serve as a positive signal. This can then lead to further liquidity and more investor interest. After all, if an attractive $500 stock were to split 10:1, bringing it to $50 a share, more investors are likely to jump in.
Plus, according to Morningstar.com, “Splits matter – because these stocks outperform after the announcement, by a lot. Average returns one year later are 25% vs. 12% for the S&P 500 SPX as a whole, say researchers at Bank of America. It’s worth brushing up on stock splits now, for two reasons. Stock splits are picking up again after a decade-long lull.”
“There were 17 last year, the most since 2013. These included Nvidia (NVDA), Broadcom (AVGO), Walmart (WMT), and Chipotle (CMG). Stock-split outperformance has picked up, too, says Bank of America. On average, the shares of stocks that split in 2024 advanced 17% after six months,” they added.
That being said, we went hunting for some of the top stock splits to bet on today.
Palo Alto Networks
In December, cybersecurity giant Palo Alto Networks (PANW) split its $400 stock 2 to 1, making it far more affordable and attractive to more investors. While it did sink shortly after that split, it’s now an even more attractive bet on cybersecurity at $185 a share.
Analysts at Citi say the company is expected to benefit from Cortex XSIAM, its artificial intelligence-driven security operations offering.
With a buy rating and a price target of $220, Citi added that “XSIAM is a machine learning platform (not rules-based/UI-based) and as a hub that collects AI-ready data (PANW ingests 80+ terabytes daily), the offering is well positioned to provide value to customers against the proliferation of AI,” as quoted by Seeking Alpha.
Chipotle
Mid-2024, Chipotle (CMG) split its shares 50 to 1, bringing its stock down to a more attractive buying price for retail investors. As of today, the now-oversold stock trades at around $50 a share over tariff concerns. However, with a good deal of negativity firmly priced into the stock we’d like to see CMG rally back to $58 initially.
Helping, Chipotle director Mauricio Gutierrez paid $500,000 on March 5 for 9,400 shares, an average price of $53 each. Two, the stock is now technically oversold on RSI, MACD, and Williams’ %R. Three, CMG is starting to bounce from triple bottom support.