Once a stock’s share price gets too high, even a single share can become too expensive for smaller investors. Stock splits don’t create any inherent value, but they are typically considered bullish catalysts, as companies usually only issue stock splits after extended periods of strong returns, and a stock split is a sign a company’s management is confident in future growth. Several high-profile companies have completed stock splits in recent years, including Amazon.com Inc. (ticker: AMZN), Alphabet Inc. (GOOG, GOOGL), Shopify Inc. (SHOP), Tesla Inc. (TSLA) and GameStop Corp. (GME).
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Here are eight stocks recommended by CFRA Research analysts that could be the next to announce stock splits:
— Markel Corp. (MKL)
— O’Reilly Automotive Inc. (ORLY)
— Equinix Inc. (EQIX)
— BlackRock Inc. (BLK)
— Broadcom Inc. (AVGO)
— ASML Holding NV (ASML)
— Lam Research Corp. (LRCX)
— Bio-Rad Laboratories Inc. (BIO)
Markel Corp. (MKL)
Specialty insurance underwriter Markel is an excellent candidate for a stock split. Markel has never issued a stock split before, but its shares are up about 140% in the past 10 years. Analyst Catherine Seifert says Markel’s revenue growth outpaces its peers and the company’s non-insurance revenues may serve as a positive catalyst. The company’s underwriting profitability is superior to its competitors, according to Seifert, who projects 15% to 20% operating revenue growth and 16% to 18% earned premium growth in 2023. CFRA has a “buy” rating and $1,520 price target for MKL stock, which closed at $1,217.05 on March 23.
O’Reilly Automotive Inc. (ORLY)
Auto parts giant O’Reilly Automotive is primed for a stock split, given its share price has gained 676% in the past 10 years, and its last stock split was in 2005. Analyst Garrett Nelson says O’Reilly has an attractive valuation and an industry-leading sales and earnings growth outlook over the next few years. Nelson is bullish on the company’s dual approach of catering to commercial and retail customers. The increasing average age of vehicles on the road is a long-term tailwind for O’Reilly. CFRA has a “buy” rating and $925 price target for ORLY stock, which closed at $801.38 on March 23.
Equinix Inc. (EQIX)
The largest global data center operator also has one of the market’s largest share prices and may be due for a split. Equinix shares are up 215% over the past 10 years. The company has split its stock once in the past, a 1-for-32 reverse split back in 2002. Analyst Michael Elliott says Equinix has an opportunity to scale its business globally, and competition is limited due to high barriers to entry in the data center market. Equinix’s highly recurring revenue base creates significant earnings visibility. CFRA has a “buy” rating and $788 price target for EQIX stock, which closed at $666.37 on March 23.
BlackRock Inc. (BLK)
BlackRock is the largest U.S. asset manager and is a leading global investment management company. In the past 10 years, BlackRock shares are up about 157%. Despite its rising share price, BlackRock has never implemented a stock split. Seifert says BlackRock’s leading position in passive investments and strong historical performance will continue to attract assets at an industry-leading clip over the next several years. She projects 5%-to-7% revenue growth in 2023. CFRA has a “strong buy” rating and $885 price target for BLK stock, which closed at $651.78 on March 23.
Broadcom Inc. (AVGO)
Broadcom is a diversified global analog semiconductor supplier. Broadcom has never issued a stock split before, but its shares are up an impressive 1,685% in the past 10 years. Analyst Angelo Zino says Broadcom’s wireless business is slowing, and there’s significant regulatory uncertainty surrounding its pending $61 billion acquisition of VMware Inc. (VMW). However, Zino says long-term growth opportunities in cloud computing more than offset these problems, and he projects overall revenue growth of 7.6% in fiscal 2023 and 3.6% in fiscal 2024. CFRA has a “buy” rating and $680 price target for AVGO stock, which closed at $639.23 on March 23.
ASML Holding NV (ASML)
ASML is the world’s third-largest semiconductor equipment supplier. ASML is another top candidate for a stock split, given its share price has gained 872% in the past 10 years. The company’s last stock split came in 2012. Analyst Keven Young says ASML’s dominance as a lithography systems supplier for leading-edge logic and memory customers positions the company well for sales growth in coming years. Young says node migrations and technology upgrades will also support demand. He projects 20% revenue growth in 2023. CFRA has a “strong buy” rating and $747 price target for ASML stock, which closed at $664.16 on March 23.
Lam Research Corp. (LRCX)
Lam Research is the world’s largest manufacturer of semiconductor etch products. In the past 10 years, Lam’s shares are up 1,191%. Despite a high share price, the company hasn’t issued a stock split since 2000. Young says the memory market outlook for 2023 is lackluster, but Lam investors should look beyond this year to a more attractive environment in 2024 and beyond. He projects 3% revenue growth in fiscal 2023 but says export controls on leading-edge customers will pressure margins. CFRA has a “buy” rating and $530 price target for LRCX, which closed at $523.59 on March 23.
Bio-Rad Laboratories Inc. (BIO)
Bio-Rad Laboratories provides life science tools and services used in clinical research and diagnostics. Bio-Rad shares are up 268% over the past 10 years. The company has split its stock four times in the past, most recently issuing a 2-for-1 split back in 2002. Analyst Ana Garcia says Bio-Rad should benefit from reducing its backlog in its life sciences segment while it navigates ongoing supply chain difficulties. Clinical diagnostics sales growth has underwhelmed, but Garcia says product launches and partnerships could boost margins in 2024. CFRA has a “buy” rating and $599 price target for BIO stock, which closed at $456.32 on March 23.
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8 Companies That Could Issue the Next Stock Split originally appeared on usnews.com
Update 03/24/23: This story was previously published at an earlier date and has been updated with new information.
