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It's Time To Bring Back Stock Splits! - 10 Stocks That Could Benefit

March 24, 2010 5:16 PM EDT
Forward stock splits have been out of favor for a long time. This trend started with the bursting of the dotcom bubble and was cemented with tech giant Google's (Nasdaq: GOOG) decision not to split its stock.

Google's move follows in the footstep of Warren Buffett's Bershire Hathaway (NYSE: BRK.a) that will never split the stock. With the performance of Google's stock since it's IPO, it could easily be argued that Google made the right move.

Forward stock splits of course change nothing fundamentally. In a 2-for-1 forward stock split for example, instead of having 100 shares you will now have 200 shares. All things being equal, the price would go from $200 to $100 under this scenario. You're even at $20,000 of value in either case.

In the go-go days of the tech-craze and dot com boom, a stock split was a sign of strength. Split your stock and more money flowed into it - logical or not.

With loads of stocks trading over $100 per share, and many others north of $300 - is it time to bring back the forward stock split?

In January, the king himself of 'no stock splits' Warrent Buffett had to split the shares of his Berkshire Hathaway B shares (NYSE: BRK.b) 50-to-1 to complete the acquisition of Burlington Northern.

The stock split brought the stock down from $3,400 to $67 per share. Again, logical or not, the stock split brought floods and floods of fresh money into the stock. People that couldn't or would never buy a stock at $3,400 loved it at $67 even though nothing fundamentally changed. Since the split, shares have moved up 22%, versus a rise of just 2.5% for the S&P 500.

Here are 10 companies that may actually benefit if they split their stock:
  • Google Inc. (Nasdaq: GOOG) - Today's close $557.33 - Recommended Split 5-for-1
  • Apple (Nasdaq: AAPL) - Today's close $229 - Recommended Split 3-for-1
  • Baidu, Inc. (Nasdaq: BIDU) - Today's close $608.50 - Recommended Split 5-for-1
  • Intuitive Surgical, Inc. (Nasdaq: ISRG) - Today's close $346.02 - Recommended Split 3-for-1
  • CME Group Inc. (NYSE: CME) - Today's close $318.90 - Recommended Split 3-for-1
  • Mastercard Incorporated (NYSE: MA) - Today's close $244.68 - Recommended Split 3-for-1
  • Goldman Sachs Group Inc. (NYSE: GS) - Today's close - Recommended Split 2-for-1
  • priceline.com Incorporated (Nasdaq: PCLN) - Today's close $243.80 - Recommended Split 3-for-1
  • BlackRock, Inc. (NYSE: BLK) - Today's close $225 - Today's close $243.80 - Recommended Split 3-for-1
  • International Business Machines Corp. (NYSE: IBM) - Today's close - Recommended Split 2-for-1
While it is pure speculation that any of these companies would announce a stock split, if one of them does, it could create a chain reaction with the others following.

As was witnessed in the Berkshire Hathaway B stock split situation, a lower price stock can bring fresh money into the stock and benefit the share price and all shareholders.

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