Stock splits don’t change the value of a company. They simply divide its profits among more shares. You can think of a split as a pizza that’s cut into slices. You still have the same amount of food. It’s just easier — and less expensive — to buy a single slice.
Nevertheless, stock splits tend to create a buzz of excitement. Companies that split their shares are usually performing well, and the ability to buy more shares of these high-flying businesses at more affordable prices is something many investors appreciate.
If you’re on the hunt for stock-split stocks, here are two of the best available to buy in the market today.
Stock split stock to buy No. 1: Walmart
People love a bargain. That’s particularly true in today’s challenging economic environment. With stubbornly high inflation driving even higher-income shoppers to search for the best deals, Walmart (NYSE: WMT) is winning market share from its higher-cost rivals.
Walmart’s shelves are well stocked with value-priced groceries and other household essentials. The retail giant’s massive scale enables it to command the best prices from suppliers. It then passes much of these savings on to its customers, which drives strong, repeat traffic to its over 10,500 stores.
The discount retailer is also enjoying solid growth in its e-commerce businesses, driven by booming demand for curbside pickup and delivery services. After surging by 23% year over year in the quarter ended Jan. 31, Walmart’s online sales now account for roughly 18% of its total revenue, or more than $100 billion annually.
Advertising is perhaps the company’s most exciting growth driver. Walmart saw a 33% surge in its global ad sales in its most recent quarter. To further fuel the growth of this high-margin segment, Walmart struck a deal to acquire Vizio in February. Vizio’s popular smart TVs and SmartCast operating system are expected to bolster Walmart’s fast-growing digital ad offerings.
With its shares trading near all-time highs, Walmart decided to reward its shareholders with a 3-for-1 stock split on Feb. 23. With several powerful growth drivers powering its earnings growth, investors can safely expect this retail titan’s stock price to continue to hit new highs in the coming years.
Stock split stock to buy No. 2: Chipotle Mexican Grill
Like Walmart, Chipotle Mexican Grill (NYSE: CMG) has created fortunes for its long-term shareholders. But don’t let that make the mistake of thinking this incredible growth story is nearing its end. The beloved restaurant chain has plenty of room for further expansion still ahead.
Chipotle is admired for its high-quality ingredients and responsible sourcing strategies. The company also offers one of the most accelerated and highest-paying career paths in the restaurant industry — employees can earn as much as $100,000 in annual compensation in as little as three years.
By appealing to consumers and job seekers alike, Chipotle has successfully grown its store count from a single location in 1993 to more than 3,400 restaurants today. CEO Brian Niccol sees a path to at least 7,000 stores in North America alone. Other international markets also beckon. Just days ago, Chipotle opened its first restaurant in Kuwait.
Importantly, Chipotle’s existing locations continue to grow more profitable. Its comparable restaurant sales rose by 7.9% in 2023, driven by traffic gains and price hikes. This impressive sales growth helped to drive the company’s restaurant-level operating margin to 26.2%, up from 23.9% in 2022. Here, too, Niccol sees the potential for more gains. He’s confident the burrito chain’s average sales per restaurant can eventually rise to $4 million, up from about $3 million today.
With so much growth still ahead, Chipotle’s stock remains a terrific buy today. Moreover, owning individual shares is likely to become more affordable this summer. The restaurant leader proposed a whopping 50-for-1 stock split, pending shareholder approval at its upcoming annual meeting in June. “This is the first stock split in Chipotle’s 30-year history, and we believe this will make our stock more accessible to employees as well as a broader range of investors,” CFO Jack Hartung said in a press release.
If approved, Chipotle’s stock split could be one of the largest in the history of the New York Stock Exchange. Buy today, and you could profit from the excitement surrounding this upcoming split. More importantly, buying Chipotle’s stock now would position you to claim your share of this proven winner’s long-term expansion.
Should you invest $1,000 in Chipotle Mexican Grill right now?
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Walmart. The Motley Fool has a disclosure policy.
2 Stock-Split Stocks to Buy Hand Over Fist Right Now was originally published by The Motley Fool
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