Investors love stock splits. Although they don’t really amount to much, stock splits are seen as a bullish sign there is more growth to come. By carving the stock up into more pieces, more investors can buy shares and push them higher once again.
In reality, though, nothing changes for the company. Shareholders are simply getting more stock at a lower price. As noted, though, it makes the stock accessible to more people. Investors who might balk at paying for a $200 per share stock might consider it if shares were split four-to-one and were available at just $50 per share.
Below are three stock-split stocks that are ready to divvy up their shares for investors in the next few months. Whatever the pros and cons of splitting shares are, these stock split stocks to buy are worth picking up now.
Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill (NYSE:CMG) is offering up the biggest split ratio. On Jun. 26 the Mexican food chain will divide its shares 50-to-1 as CMG stock goes for over $3,100 a share. The split ratio will knock the price down to around $60 per share or so but will give investors 50 shares for every one they own.
Whether you buy now or wait till later doesn’t matter. Chipotle Mexican Grill stock is a growth stock to buy. Business is still going strong. Sales rose 14% in the first quarter to $2.7 billion on a 7% jump in comparable restaurant sales. Operating margins widened to 16.3% from 15.5% a year ago. Chipotle’s restaurant-level operating margin expanded by 190 basis points to 27.5%.
Much of the success Chipotle enjoys stems from offering good food at competitive menu prices that pull away customers from both casual dining and traditional fast-food chains. That enduring quality separating it from the competition was broadened with the arrival of Chipotlane drive-thru windows. They made buying its quality food an easy, no-hassle process that let the chain expand sales exponentially. Expect that to continue no matter the stock price.
Nvidia (NVDA)
Similarly, Nvidia (NASDAQ:NVDA) is a stock split stock to buy now. It has become the face of the burgeoning artificial intelligence (AI) growth market, which catapulted Nvidia stock’s valuation. The chipmaker is now the third most valuable company behind only Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).
Nvidia, of course, has been driving much of the stock market’s gains for the past year and a half. As the premiere Magnificent Seven stock, its shares have already doubled this year and tripled over the past 12 months. With NVDA stock going for more than $1,100 a share, the AI chipmaker announced last week it would be splitting its stock by a 10-to-1 ratio. The split will happen on Jun. 7 and bring the per-share value down to around $110. Nvidia will still be worth $2.8 trillion.
With the AI revolution in its early years, look for Nvidia to keep growing. While near-term financial performance won’t look the same since it will begin lapping last year’s phenomenal gains, the chipmaker remains an important stock to own.
United States Lime & Minerals (USLM)
The third stock split stock to buy is United States Lime & Minerals (NASDAQ:USLM). This is a Peter Lynch-esque stock through and through. The company operates limestone quarries and mines around the country. It primarily supplies the road construction industry, steel producers and water treatment facilities with lime and limestone products. It’s an under-the-radar, unloved business, just the sort the investing legend would love.
U.S. Lime’s products are sold mostly in just 10 states and it has around 650 customers. Because its product is so essential to these industries, it doesn’t need to hire more than 10 salespeople to take orders. The product basically sells itself.
That doesn’t mean the miner doesn’t face hurdles. Lime and limestone are subject to pricing and input cost volatility so a high inflation, high-interest rate environment can affect its business. Still, U.S. Lime’s business is booming. The stock is up 50% year-to-date and 93% higher over the past year. Shares go for around $350, meaning the five-for-one stock split U.S. Lime announced will put shares around $70 each. The split is set to take effect on Jul. 15.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
