Stock splits have long been cheered by the investing community. After all, this gives retail investors the chance to get back in a stock at a more reasonable share price. You may recall the endless stock splits that were seen in the late 1990s and just after 2000, when so many technology and growth stocks were doubling, then tripling and more in share prices.
Some investors and some corporate managers consider a stock split a mere share price gimmick. The problem is that the public only has so much money. If a stock trades at $400 per share, an order of a traditional 100 shares from a retail investor generates a purchase price of $40,000 to buy the stock. An overwhelming percentage of the U.S. population cannot even come up with $10,000 as an emergency expense, let alone to buy shares as an investment.
It is undeniably a bull market. We have even seen a technical analyst prediction calling for the new all-time highs to continue, taking the S&P 500 up from 1,700 to 2,000, and then a secular bull market rally to over 2,500. If we really are entering the next secular bull market after more than a decade of a bear market, then it only seems logical that companies will want to start splitting their stocks again.
24/7 Wall St. has compiled a list of stocks that really should consider making stock split announcements. Maybe it is a bull market gimmick, but a wave of stock splits from key stocks could reinvigorate the mood and outlook of investors who have grown to have disdain and serious trust issues regarding the stock market.
Our screen deals with companies that have a very high stock price, all well over $100 and $200. All of them should be household names, and they are just about all members of the S&P 500 Index. We also selected stocks that are actively traded and liquid. These companies are all still growing, and some have issued stock splits in the past.
We have included how much it would cost an investor to buy 100 shares. Also included is a backgrounder for each company, and we have added color on each. Each company’s stock split history has been included, if applicable.
Amazon.com Inc. (NASDAQ: AMZN)
> Cost for 100 shares: $30,000
Amazon.com trades roughly at $300 now, and its 52-week range is $218.18 to $313.62. Its market cap is close to $137 billion, and Jeff Bezos has taken Amazon into almost every single facet of retail consumer products. The company has been a disrupting force for all retail segments as well. Amazon split its stock three different times in the most recent great technology boom and bull market: two for one in 1998, and three for one later in 1998 and lastly two for one in 1999. Its last stock split took shares to the equivalent of about $60 on par with today’s price of $300.
Apple Inc. (NASDAQ: AAPL)
> Cost for 100 shares: $46,500
Apple was the bull market king until the stock peaked at $705 in 2012. Now the company’s lead against technology peers has narrowed, it is dependent on new product excitement, which has been elusive, and the leadership today just does not have the same clout as the great Steve Jobs. With shares trading around $465, Apple’s 52-week range is $385.10 to $705.07, and its market cap of $422 billion makes it the largest single public company. Apple is now paying a dividend and is approved for share buybacks, so a dividend split would not be out of line. Apple has even had three different two-for-one stock splits: in 2005, 2000 and 1987. Apple’s most recent stock split took its shares to roughly $44 in today’s price terms, so it has risen tenfold despite it latest stock price woes. Here is some food for thought: Apple consumers still pay almost the same for one share as they do for many of the company’s retail products.
AutoZone Inc. (NYSE: AZO)
> Cost for 100 shares: $44,000
Does the great auto parts seller named AutoZone remind you of a stock that would trade above $400 per share? With its shares around $440, it has a 52-week trading range of $341.98 to $452.19. This industry leader has a $15.6 billion market capitalization as well. AutoZone has split its stock on a two-for-one basis twice, but back in 1994 and 1992. In today’s share price terms, that most recent split was around $27 back then, and that means its stock has risen sixteenfold since then. How many customers going into an AutoZone would think that a stock price of $440 or so seems right? We do not even see a dividend from AutoZone as it reinvests earnings into growth.