Investing

13 Companies That Should Consider Stock Splits This Earnings Season

AutoZone Close to $1,200 Per Share

AutoZone Inc. (NYSE: AZO) was last seen trading at $1,182, within a 52-week range of $684.91 to $1,274.41 and with a market capitalization of $27.6 billion. AutoZone is in a strange situation, as a car parts store with a massive stock price. This might not tell its customers who come into the store that perhaps they should buy a share of stock for the same price of five car batteries. Its last splits were both two-to-one, way back in 1994 and 1992.

AutoZone oddly enough pays no dividend, but its history of stockholder returns has been focused on repurchasing its common stock. The move of shrinking its outstanding shares is used to boost the earnings per share. Even as of October 2019, the company had authorized a total of $23.2 billion in share repurchases since its repurchase program kicked off in 1998.

Booking Holdings’ Fears of Yesteryear

Booking Holdings Inc. (NASDAQ: BKNG) was last seen trading close to $1,660.00, and its 52-week range is $1,107.29 to $2,094.00. It has a $68 billion market cap that should now be worth the entire airline industry and many hotel chains combined. One interesting aspect of a would-be split here is that it had to engage in a dreadful reverse stock split back in 2003 (by one for six) because its stock price was so low back then. That was when it still was known to investors as Priceline.com. Its trading volume likely would be considerably higher than the 400,000 on average, and its wide bid-ask spread would narrow as well.

Boston Beer’s Stock Above $900

Boston Beer Co. (NYSE: SAM) was last seen trading above $925. The stock’s 52-week range is $290.02 to $986.78, and its market cap is now $11.4 billion. Boston Beer is another stock for which such a high share price just makes no sense on the surface. Many people love to drink their beers and their newer seltzers. One dilemma using the Peter Lynch way of sticking with goods you know and investing in them creates a mental dilemma. When a customer can buy one share of common stock for the cost of maybe 100 six-packs, there may be an incentive to just drink more rather than invest more.

Charter Communications: Up 200% in Five Years

Charter Communications Inc. (NASDAQ: CHTR) was last seen trading at $610.00, and its 52-week range is $345.67 to $621.04. It has a market cap of $125 billion. Charter Communications has the highest price of any cable and media stock. It is what is left of business combinations with Bright House Networks and Time Warner Cable, now under the Spectrum brand. Those roll-ins are long enough in the past that there is no reason to have such a high share price. Charter also pays no dividend.

Chipotle Up 350% Since Peak-Montezuma

Chipotle Mexican Grill Inc. (NYSE: CMG) was last seen trading at $1,335.00, and its 52-week range is $415.00 to $1,384.47. It has a $37 billion market cap, and it now seems almost impossible to fathom that Chipotle was once spun out of McDonald’s. Even after it made customers so ill in the past, its customers tend to have extremely high loyalty rates. It has also been a post-coronavirus winner from its digital and to-go efforts. Turning customers into shareholders may be a tough sell here. When a 20-something or 30-something types in “CMG Stock” as a search on their smartphones and they see the price above $1,300 another thought comes to mind: “I can buy one share of stock or pay for my next 130 meals with the same cash.” It’s a tough mental exercise and Chipotle still pays no dividend.

Equinix Up 200% in Five Years

Equinix Inc. (NASDAQ: EQIX) was last seen trading above $810.00, and its 52-week range is $477.87 to $839.77. It has a $72 billion market cap, and it is a real estate investment trust involved in data centers. As a REIT, it has close to a 1.3% dividend yield. Some investors consider it somewhat as an AWS without all of the other Amazon operations. The company may have a specific reason to avoid a split though. The last split on record was a reverse split of 1-for-32 back in 2002.

Netflix: Up 300% in Five Years

Netflix Inc. (NASDAQ: NFLX) has seen a massive win from the COVID-19 era creating the stay at home economy. Movie theaters may not ever be the challenge they used to be even after a vaccine arrives. Netflix was last seen trading at $529.00 a share. It has a 52-week range of $252.28 to $575.37 and a $233 billion market cap. Analysts keep driving their target prices higher and higher and the stock has witnessed a major triple-top chart pattern.

And using the “buy the service or the stock” scenario sounds like a tough sell also. Customers may think of one share at $529.00 or so as being more than 50 months of service fees. With close to 20 years of trading history, Netflix split seven-for-one back in 2015 and two-for-one back in 2004.

NVR: Homebuilder Up Almost 175% in Five Years

NVR Inc. (NYSE: NVR) is now a $4,280 stock, the highest of any homebuilding stock price by a factor of about 40-to-1. The stock has continued hit new all-time highs and has more than doubled from its lows in March. The company was recently the third-largest homebuilder by market cap, with a $15.8 billion value. NVR also pays no dividend. Imagine what might happen to its trading volume when it currently trades just 21,000 shares on an average day.

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