Stock splits have become popular again in recent years. This practice was common in the past few decades, but fell out of favor and has been revived again in recent years. Companies typically embark on this course after years of strong operating and financial results, resulting in stock prices soaring.
The evidence suggests that the strong performance that triggered the stock split tends to continue. According to data compiled by Bank of America analyst Jared Woodard, companies that implement a stock split have an average stock price increase of 25% in the year following the announcement, compared to the average stock price increase for the S&P 500. is 12%.
Here are three stock split stocks whose stock prices have risen as much as 215% and still have a long way to go, according to Wall Street’s top analysts.
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1. Broadcom: 36% upside potential
The first of our stock split stocks that represents an attractive opportunity for investors is Broadcom (NASDAQ: AVGO). The company offers a wide range of software, semiconductor and security products across the mobile, broadband, cable and data center sectors.
In fact, the company reports that “99% of all Internet traffic travels through some type of Broadcom technology.” This means Broadcom’s technology can help you deploy artificial intelligence (AI).
The company’s recent performance speaks for itself. Broadcom’s fiscal third quarter (ending August 4) saw revenue of $13 billion, an increase of 47% year-over-year, and adjusted earnings per share (EPS) of $1.24, an increase of 18%. . The company continues to integrate with VMWare, which is weighing on revenue, but management expects an even bigger contribution in fiscal 2025. Broadcom also raised its full-year revenue outlook to $51.5 billion, representing growth of nearly 44%.
The company’s track record of stable and consistent growth led to a 10-for-1 stock split in July. Although the stock has more than tripled since the beginning of 2023 (which coincided with the beginning of the AI revolution), many on Wall Street believe the best is yet to come. Hans Mosesmann, an analyst at Rosenblatt Securities, rates Broadcom stock a “buy,” with a market-high, split-adjusted price target of $240. This represents a potential upside of 36% for investors compared to Friday’s closing price.
Mosesman indicated that management’s guidance is conservative, leaving room for upward revisions. He sees particular opportunity in Broadcom’s application-specific integrated circuits (ASICs) and ancillary products that support networking and switching, and expects AI-related demand to increase. He also claims that the VMWare integration will improve Broadcom’s performance.
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Mosesman is not alone in making bullish predictions. Of the 39 analysts who rated the stock in September, 35 rated it a “buy” or “strong buy,” and none recommended it as a sell.
Investors may be surprised to learn that Broadcom stock trades at less than 28 times next year’s expected earnings, but I believe this is a bargain given the company’s long track record of growth and expanding opportunities. is thinking.
2. Nvidia: 85% potential upside
The second stock split stock with a long runway is Nvidia (NASDAQ:NVDA). The company’s graphics processing units (GPUs) are the gold standard for a variety of applications, including video games, cloud computing, and data centers. This technology also helps handle generative AI and provides the computational power to make it possible.
This fueled Nvidia’s huge success. In the second quarter of fiscal 2025 (ending July 28), NVIDIA achieved record quarterly revenue of $30 billion, up 122% year-over-year, and diluted earnings per share (EPS). rose 168% to $0.67. Sales rose 154% to $26.3 billion, as the company’s data center division, which includes chips used in AI, drove results.
This marks Nvidia’s fifth consecutive quarter of triple-digit growth in sales and profits, while the company’s stock price has risen 754% since the beginning of 2023, leading to a 10-for-1 stock split. The stock has been on a roller coaster in recent months, initially losing more than a quarter of its value, but has since made a remarkable recovery and is now less than 8% from its all-time high.
There may be more to come, but don’t just take my word for it. Rosenblatt analyst Hans Mosesmann reiterated his Buy rating and Nvidia’s market-high price target of $200, indicating a 60% upside potential compared to Friday’s closing price.
The analyst believes investors are missing a key element of NVIDIA’s success, saying, “The real story is in the software, which complements the strengths of all the hardware. “We expect this to increase significantly over the next 10 years in terms of overall sales mix.” Upward bias in sustainability ratings. ”
He’s not alone in believing Nvidia needs to do more. Of the 60 analysts who published their opinions in September, 55 rated the stock a “buy” or “strong buy,” and none recommended it as a sell.
I have no doubts that Nvidia’s stock price can rise from here. In fact, I think analysts’ price targets are likely to be conservative.
3. Supermicrocomputers: Potential increase rate of 215%
Of our three stock split stocks, the last one is clearly the most controversial. Super Micro Computer (NASDAQ: SMCI), also known as Supermicro, has been a leading provider of custom-designed servers for more than 30 years.
The company’s secret weapon is its rack-scale server building block architecture. By designing key components that work together, Supermicro customers can create the system that best suits their specific needs and price point, rather than just pulling something off a “rack.” The company is also a clear leader in direct liquid cooling (DLC), which is uniquely suited to the rigors of AI. CEO Charles Liang estimates that Supermicro controls 70% to 80% of the DLC market.
In the fourth quarter of fiscal 2024 (ending June 30), Supermicro posted record revenue of $5.3 billion, an increase of 143%. At the same time, the company increased its adjusted EPS by 78% to $6.25. While the decline in profit margins has raised some eyebrows, Liang blames it on temporary bottlenecks in components and product mix and expects it to recover in time. That said, the company’s strong financial performance comes ahead of a 10-for-1 stock split that was completed earlier this week.
But Supermicro has become a hotly contested stock in recent weeks. In late August, a short report by Hindenburg Research accused accounting fraud, sanctions violations, and undisclosed third-party transactions, among other accusations. The next day, Supermicro postponed filing its annual report, citing the need to evaluate the “design and effective operation of internal controls.” As if that wasn’t enough, the Wall Street Journal says a report has emerged suggesting the U.S. Department of Justice is investigating the company.
Despite the resulting uncertainty, some on Wall Street are undaunted. Following these revelations, Rosenblatt analyst Hans Mosesmann gave the company a “buy” rating and maintained his split-adjusted maximum price target of $130. This represents a potential upside of 215% compared to Friday’s closing price. Analysts suggest that the recent stock price correction “looks overdone, considering the Hindenburg dynamic to be old news or inaccurate.”
Not surprisingly, other Wall Street companies are taking a “wait and see” approach. Of the 18 analysts who covered the stock in September, nine still rate it a “buy” or “strong buy.” The rest are recommended to be held and none are recommended to be sold.
As a short seller, Hindenburg Research has a vested interest in driving down the stock prices of the stocks it targets, and its motives are questionable. Additionally, this paper has a mixed track record, so its conclusions should not be considered gospel.
For investors who can tolerate some risk, I think the opportunity to own supermicro stocks outweighs the risk represented by the (so far) unsubstantiated claims by short sellers. And as a Supermicro shareholder, my money is where my mouth is. Finally, Supermicro’s price-to-earnings ratio of just 21x makes it a bargain.
Should you invest $1,000 in Broadcom right now?
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Bank of America is an advertising partner of The Motley Fool’s Ascent. Danny Vena has held positions at Nvidia and Super Micro Computer. The Motley Fool has a position in Bank of America and Nvidia and recommends Bank of America and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
The 3 split-stock stocks to buy before they soar as much as 215% were issued by The Motley Fool, according to some Wall Street analysts.
