The trend of stock splits is making a major comeback after peaking in the 1990s. High-performing companies often split their shares when a single share becomes too expensive for typical investors, thus making the shares more attainable and possibly boosting demand.
Stock splits may increase liquidity as more investors can afford these cheaper stocks, making trading easier. However, even though stock splits can make shares more appealing it doesn’t necessarily alter the actual value or financial well-being of the company.
Backed by evidence, companies performing satisfactorily and executing forward splits usually see a 25% rise in share price on average post-announcement. This surpasses the average market growth rate of 12%. These snippets of information were supplied by Bank of America analyst Jared Woodard.
Woodard also shed light on how forward splits statistically result in higher trading volumes, which equates to greater liquidity for the company’s shares. A drop in share price following a split is perceived as more affordable and attractive to investors.
Three stocks poised for success are Broadcom, NVIDIA, and Adobe Systems. Broadcom leads with its key services in various tech sectors and the fact that 99% of all internet traffic is claimed to be processed using their technology. NVIDIA holds substantial promise due to its dominant position in AI and gaming.
Resurgence of stock splits boosts share demand
Adobe Systems is an attractive investment option, primarily due to its range of creative software and digital marketing solutions.
Broadcom’s second-quarter revenue rose by 43% year on year, reaching $12.5 billion. Despite a 152% increase from last year, analysts are hopeful about the company’s stock. Broadcom’s impressive performance in its wireless and enterprise storage solutions led to an influx of investments, further strengthening its capital base.
Nvidia is targeting an upside of 99%. Being a leading chip provider for cloud computing, video games, and data centers, Nvidia holds considerable potential. The high demand for chips in generative AI showcases the company’s strong hold in this fast-paced tech field. This success forecasts a positive future for Nvidia’s stock.
AI plays a significant role in Nvidia’s robust outlook, indicating potential for substantial returns in the investment. Investors aiming for rapid growth and profitability are likely to benefit highly from Nvidia’s strategic positioning in AI development.
