Two Growth Stocks That Could Split Soon: A Smart Investment Guide
The Impact of Stock Splits on Investors
When a company announces a stock split, it typically signifies a boost in their market confidence rather than altering the company’s core value. Investors often view this as a positive indicator, leading to increased interest and potential share price surges. Companies that consider splitting their stock usually do so post a significant rise in share prices, suggesting optimism about future growth. As a result, savvy investors often look for stocks that may be candidates for a split, as they are likely to present lucrative opportunities.
Identifying Potential Stock Split Candidates
Before investing in potential stock-split candidates, it’s crucial to assess their growth prospects. Stocks that have seen considerable appreciation and still possess growth potential often attract heightened attention post-split announcements. Even for investors who prefer a long-term view, entering before a split can yield substantial rewards, as these companies usually maintain good upside potential irrespective of whether they proceed with a split.
1. Microsoft: A Leader in Innovation and Growth
Microsoft (NASDAQ: MSFT) has dramatically increased its market value, marked by a staggering 622% rise since October 2016. A significant factor contributing to this growth is Microsoft's strategic investment in generative artificial intelligence, including substantial financial support for OpenAI. This foresight has allowed Microsoft to establish Azure as a key platform for developers working with large language models like GPT-4.
Additionally, Microsoft’s innovative applications of AI across various software solutions, such as Office 365 and Dynamics 365, are further boosting its revenue. Their Azure revenue growth of 30% in the fourth quarter indicates a shift towards advanced technologies, signifying that Microsoft’s expansion will likely accelerate as it adds new data centers.
Microsoft is also seeing a surge in the use of its Copilot feature, which aids users in maximizing productivity. With a solid user base exceeding 400 million for Office 365, the potential for continued expansion remains strong, which bolsters the case for a possible stock split if shares continue to climb significantly.
Why a Microsoft Stock Split Makes Sense
Despite a recent dip from its all-time high, shares remain robustly priced above $400. In the context of its market position as the third-highest priced component in the Dow, a stock split could make shares more accessible to a broader range of investors, potentially driving further demand.
2. ASML Holdings: A Unique Position in the Semiconductor Sector
ASML Holdings (NASDAQ: ASML) has witnessed an impressive price appreciation of 694% since October 2016, thanks to its pivotal role in the semiconductor manufacturing process. As the sole supplier of extreme ultraviolet (EUV) lithography machines, ASML caters to the skyrocketing demand from tech giants investing heavily in artificial intelligence infrastructure.
While ASML is currently expecting a transitional year in 2024, the long-term forecast appears promising. It anticipates substantial revenue growth, projected between 30 billion to 40 billion euros in 2025—a 27% increase from the previous year. Analysts believe ASML's significant investments in manufacturing its latest machines will propel its growth trajectory moving forward.
ASML's Viability for a Stock Split
Despite ASML's shares being well below their peak, trading around $850, sustained growth could make a stock split appealing. Analysts predict a 33% upside from the current price point, indicating that if shares surpass $1,000, a stock split would not only be warranted but could also reinvigorate investor interest at a lower price point.
Recognizing Investment Opportunities
Do you sometimes feel like you’ve missed out on investing in top-tier stocks? Utilize the insights about potential stock splits in Microsoft's and ASML's stock price appreciation as a guide for future investment opportunities. Companies that are on the brink of splitting their stocks can signal unrecognized potential that may lead to significant investor returns.
Frequently Asked Questions
What indicates that a company might split its stock?
A company may consider a stock split after experiencing a significant price increase, signaling growth and confidence in future performance.
How do stock splits affect existing shareholders?
Stock splits increase the number of shares owned by investors while proportionally reducing the share price, theoretically maintaining the overall value of their investment.
Why are Microsoft and ASML highlighted for potential splits?
Both companies have reported substantial price increases and continued growth potential, indicating market confidence that may lead to stock splits in the future.
What should investors look for in potential stock-split candidates?
Investors should look for companies with strong growth trajectories, financial stability, and a history of significant share price increases when identifying potential split candidates.
Is it a good strategy to invest before a stock split?
Investing before a stock split may yield positive results, as splits can attract more investor interest, leading to potential price increases.
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