In recent years, the popularity of stock splits has experienced a significant resurgence. This practice, which was once commonplace, had fallen out of favor but has now rebounded. Typically, companies undertake this strategy after achieving strong business and financial results, resulting in a surge in their stock price. Historical data suggests that the strong performances that precede stock splits tend to persist. In fact, companies that conduct stock splits often deliver stock price gains of 25% on average in the year following the announcement, outperforming the S&P 500’s average increases of 12%.
Among the companies that have recently undertaken stock splits, three stand out for their impressive growth prospects and potential upside. The first is Broadcom, a leading provider of software, semiconductor, and security products. With its technology being instrumental in the adoption of artificial intelligence, Broadcom’s recent results have been impressive, with revenue jumping 47% year-over-year to $13 billion and adjusted earnings per share increasing 18% to $1.24. Following its 10-for-1 stock split, many analysts believe the company still has significant upside potential, with one analyst setting a price target of $240, representing a potential gain of 36%.
Another company with a long runway ahead is Nvidia, a leader in graphics processing units and artificial intelligence. Its recent results have been blockbuster, with revenue surging 122% year-over-year to $30 billion and diluted earnings per share soaring 168% to $0.67. Following its 10-for-1 stock split, Nvidia’s stock has been on a roller-coaster ride, but many analysts believe it still has significant upside potential, with one analyst setting a price target of $200, representing a potential gain of 60%.
The third company is Super Micro Computer, a leading provider of custom-designed servers and a clear leader in direct liquid cooling technology. Despite recent controversy surrounding accounting irregularities and an investigation by the U.S. Justice Department, some analysts remain bullish on the company’s prospects, with one setting a price target of $130, representing a potential gain of 215%. With its stock trading at just 21 times earnings, Super Micro Computer may present a compelling opportunity for investors willing to take on some risk.
These three companies have demonstrated strong growth prospects and have the potential to deliver significant returns for investors. While there are risks associated with investing in the stock market, these companies’ track records of solid growth and expansive opportunities make them worth considering.
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