Sometimes, the success of a company can take the stock so high that it pushes investors away. It is due to this reason that the management announces a stock split.
While a stock split does not change anything in terms of the fundamentals of the company, it makes it easier for investors to own the stock. 2024 has been the year for stock splits and there are many stock split candidates that could make the big announcement.
Right from the tech darling Nvidia (NASDAQ:NVDA) to the popular Chipotle Mexican Grill (NYSE:CMG) and Walmart (NYSE:WMT), they have all gone through splits this year.
Retail investors pounce on the opportunity of a stock split and make the most of the opportunity.
A lower price means the stock becomes easily affordable and usually gets a boost after it starts trading at the new price. Here are three companies that are ideal stock split candidates for the year. Let’s take a look at them.
Eli Lilly (LLY)
Up 41% year-to-date, Eli Lilly (NYSE:LLY) stock is exchanging hands for $834 and is one of the top pharma stocks to own. The company has reported impressive revenue growth, driven by the obesity drugs Zepbound and Mounjaro.
It hit the 52-week high of $960 earlier this month and has seen a pullback lately. Besides weight loss, the company also has a solid portfolio of drugs used in cancer and it was recently granted FDA approval for donanemab, its Alzheimer’s drug.
After receiving the FDA approval for Mounjaro in 2023, the company has seen steady sales growth. It generated $1.8 billion in revenue in the first quarter while Zepbound generated $517 million.
These are two blockbuster drugs in the market that have seen massive demand and Eli Lilly has invested $9 billion in a new manufacturing facility to boost production.
The company’s upcoming quarterly results could push the stock toward $1,000 and make it difficult for investors to own it. It is clear that the demand for weight loss drugs is high and Eli Lilly is in the position to make the most of it.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) has been on a rally for 18 months and is up 147% YTD. Exchanging hands for $705, the stock has been steadily moving higher since the beginning of the year and now would be the ideal time for a split.
Its partnership with Nvidia has given the stock a boost and as Nvidia grows, SMCI follows. The company got a first-mover advantage and as the AI market expanded, it showed tremendous growth.
It makes servers that help run AI processors and microchips and the company has seen impressive demand across the world. The future is AI and with the demand steadily rising, SMCI is at the right place at the right time. Super Micro Computer added three new facilities this year to meet the demand.
The company was recently added to the Nasdaq 100 index which will give it more exposure as mutual funds and ETFs that track this index will buy the shares.
Fundamentally, SMCI has become a hot property. In the third quarter, it saw a 200% jump in revenue to hit $3.85 billion and it is aiming for a revenue of $14.7 billion for the full year.
While a stock split does not change anything fundamentally for the company, it can make the stock cheaper for investors. As SMCI inches closer to $1,000, a stock split could be on the cards.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) debuted in 2007 and the company has never split its stock. This year could be different. Trading at $1,650, the stock is valued at a premium and is up 8% YTD. It is up 40% in the past 12 months and the company doesn’t pay dividends either.
The Latin American e-commerce company is very similar to Amazon (NASDAQ:AMZN) and operates in a market where it has seen tremendous growth. It has diversified into fintech and focuses on digital payments. The biggest benefit that the company has is its location.
It operates in Latin America where fintech is still in the growth stage and there is minimal competition. In the first quarter, it saw a 36% YOY jump in revenue to $4.33 billion and 59% of the total revenue came from Brazil. Even its advertising revenue grew 64% YOY.
As a business, MercadoLibre is a lucrative undertaking and generates adequate cash to keep investing in new opportunities. Its e-commerce segment saw massive growth and the business reported an EPS of $6.78 per share.
MELI stock could keep moving higher, driven by the strong fundamentals and market expansion. MercadoLibre is in a very strong position to benefit from the growing popularity of e-commerce and digital payments. The company will report results next week and could keep the momentum going.
On the date of publication, Vandita Jadeja 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.