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Nvidia is the eighth company this year to announce a stock split.
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Stock splits don’t affect a company’s market value, but are historically bullish, according to Bank of America.
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These are eight expensive stocks from the S&P 500 that could be the next to make a split.
Nvidia last week became the eighth company this year to implement a stock split, following mega-corporations Walmart in January and Chipotle in March.
The company will give its investors nine additional shares for every share they own, and the stock price will be just over $100 per share, up from the current price of over $1,000, when the split takes effect on June 10.
While stock splits don’t affect a company’s underlying fundamentals nor a company’s market value, they have historically been a bullish signal, according to a Bank of America analysis.
“The average return a year later is 25%, versus around 12% for the broad market. The divide appears bullish across market regimes, something management teams might consider if shares look too expensive to buy back,” said Bank of America in a note on Thursday.
Future stock splits are ultimately a sign of strength, because the company’s rising stock price often reflects the growing profits of the underlying company.
A major reason why companies go through stock splits is that high stock prices can make investments in the company inaccessible to employees and retail investors, which is the main reason cited by Walmart and Nvidia in their decision to go through a stock split.
“Splits do not impact company fundamentals, but can increase liquidity by making shares more accessible,” Bank of America said.
Bank of America said there are about 36 companies in the S&P 500 index with a combined market value of $7.4 trillion that are ripe for a stock split, with their stock prices above $500 per share.
Meanwhile, there are eight S&P 500 companies that are even more likely to split their shares, with a current stock price above $1,000 per share.
8. Deckers outside
ticker: DECK
Stock price: $1,033.80
Market value: $26.5 billion
7. TransDigm group
ticker: TDG
Stock price: $1,348.40
Market value: $75.5 billion
6. Honest Isaac
ticker: FICO
Stock price: $1,371.89
Market value: $33.9 billion
5. Broadcom
ticker: AVGO
Stock price: $1,411.14
Market value: $654.0 billion
4. Mettler-Toledo
ticker: MTD
Stock price: $1,474.15
Market value: $31.5 billion
3. AutoZone
ticker: AZO
Stock price: $2,790.63
Market value: $48.3 billion
2. Booking positions
ticker: BKNG
Stock price: $3,795.04
Market value: $128.7 billion
1. NVR Inc
ticker: NVR
Stock price: $7,438.82
Market value: $23.3 billion
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