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Always keep track of 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, 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.”
Look at O’Reilly Automotive (SYM: ORLY).
In June, the stock split 15 for 1. Since then, ORLY rallied from about $88 to a high of $107.96. While it has since pulled back, it’s a good example of why you want to buy into stock splits, especially with strong companies, like ORLY.
Here are two more worth considering.
Netflix (SYM: NFLX)
Now at $1,113.80, Netflix just announced a 10 for 1 split, which will help make it even more attractive to investors who don’t want to shell out $1,000 for a stock. On November 10, shareholders will receive nine additional shares for every one share owned.
According to the company, it’s doing so to “reset the market price of the Company’s common stock to a range that will be more accessible to employees who participate in the Company’s stock option program.”
ServiceNow (SYM: NOW)
At $929 a share, NOW just announced a 5 for 1 stock split. As noted by CNBC, “ServiceNow’s board also approved a five-for-one stock split slated for the beginning of December. [CEO Bill] Mastantuono said the split will make shares accessible to more retail investors.”
NOW also topped earnings estimates.
Its EPS of $4.82 beat estimates of $4.27. Revenue of $3.41 billion beat estimates of $3.35 billion. It also increased its full-year guidance, now expecting subscription revenue to range between $12.84 billion and $12.85 billion. Last quarter, the company raised FY guidance to a range of $12.78 billion to $12.80 billion.
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BREAKING: Senate Bill 394 Authorizes New U.S. Dollar
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See Louis Navellier's new analysis of Trump's 21st-century dollar.
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Written by Ian Cooper