3 companies preparing for a stock split

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Sometimes, a company’s success can drive up its stock price so high that it scares away investors. For this reason, the board announces a stock split.

While a stock split doesn’t change anything in terms of the company’s fundamentals, it does make it easier for investors to own shares. 2024 is the year of stock splits, and there are a number of split candidates who could make a big announcement.

Straight from a technology lover Nvidia (NASDAQ:NVDA) to popular Chipotle Mexican Grill (NYSE:CMG) and Walmart (NYSE:WMT), they all experienced breakups this year.

Individual investors are jumping on the stock split opportunity and making the most of it.

A lower price means that the stock is becoming readily available and will usually appreciate in value once it begins trading at the new price. Here are three companies that are ideal candidates for a stock split this year. Let’s take a look at them.

Eli Lilly (LLY)

Up 41% year-on-year, Eli Lilly (NYSE:LLY) shares are trading at $834 and are one of the best pharma stocks to own. The company has seen impressive revenue growth, driven by obesity drugs Zepbound and Mounjaro.

It hit a 52-week high of $960 earlier this month and has recently fallen. In addition to weight loss, the company also has a solid portfolio of drugs used to treat cancer and recently won FDA approval for donanemab, a drug for Alzheimer’s disease.

After receiving FDA approval for Mounjaro in 2023, the company saw steady sales growth. In the first quarter, it generated $1.8 billion in revenue, while Zepbound generated $517 million.

These are two blockbuster drugs that are in high demand, and Eli Lilly has invested $9 billion in a new manufacturing facility to ramp up production.

The company’s upcoming quarterly results could push the stock toward $1,000 and make it harder for investors to own it. It’s clear that demand for weight loss drugs is high, and Eli Lilly is positioned to take full advantage of that.

Supermicrocomputer (SMCI)

Super microcomputer (NASDAQ:SMCI) has been on an 18-month rally and is up 147% YTD. Exchanging hands at $705, the stock has been steadily rising since the beginning of the year and now would be a perfect time to split.

The partnership with Nvidia gave the stock a boost, and as Nvidia has grown, SMCI has followed suit. The company has gained a first-mover advantage and, as the AI ​​market has grown, has shown tremendous growth.

The company makes servers that help power AI processors and microprocessors, and the company has seen impressive demand worldwide. The future is AI, and with demand continuing to grow, SMCI is in the right place at the right time. Super Micro Computer has added three new facilities this year to meet demand.

The company was recently added to Nasdaq100 index, giving it greater exposure as mutual funds and ETFs tracking the index buy the shares.

SMCI has essentially become a hot business. It reported a 200% increase in revenue in the third quarter, reaching $3.85 billion, and is on track to reach $14.7 billion in revenue for the full year.

While a stock split doesn’t fundamentally change anything for the company, it could make the stock cheaper for investors. As SMCI approaches $1,000, a stock split could be in the cards.

MercadoLibre (MELI)

MercadoLibre (NASDAQ:MELIA) debuted in 2007, and the company has never split its shares. This year could be different. The shares are trading at $1,650, at a premium, and are up 8% YTD. They’re up 40% over the past 12 months, and the company doesn’t pay a dividend 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 is focused on digital payments. The company’s biggest advantage is its location.

It operates in Latin America, where fintech is still in its growth phase and competition is minimal. In the first quarter, it saw revenue grow 36% YoY to $4.33 billion, with 59% of total revenue coming from Brazil. Even advertising revenue grew 64% YoY.

As a company, MercadoLibre is a lucrative venture and generates enough cash to continue investing in new opportunities. Its e-commerce segment has seen tremendous growth, with the company reporting EPS of $6.78 per share.

MELI stock could continue to rally, fueled by 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 reports results next week and could maintain its momentum.

As of the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are the author’s own, subject to the InvestorPlace.com Publishing Guidelines.

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