High-priced stocks can be a drag. It may only be psychological, but paying $1,000 for a single share of stock often feels like a raw deal. More to the point, some people simply can't afford to spend so much. Sure, there are alternatives, such as fractional shares. Still, what many investors really want is lower-priced stocks.
So, with that in mind, here are my picks for the biggest (and most anticipated) potential stock splits in 2024.
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Fair Issac Corporation
Simply too good to ignore. That's my opinion of FairIssacCorporation(NYSE: FICO). Famous for its credit scoring system, Fair Issac is one of the top-performing stocks of the last 10 years.
Indeed, $10,000 invested in Fair Issac in 2013 would have grown to an eye-popping $191,640 today.
FICO Total Return Level data by YCharts
Similarly, Fair Issac's stock price itself has ballooned. A single share now trades at a price over $1,100. The company last split its shares nearly 20 years ago, executing a 3-for-2 stock split on March 11, 2004.
Regardless of whether Fair Issac executes a split, investors should consider owning its stock, as the company remains red-hot. Analysts estimate Fair Issac will grow sales 12% next year to $1.9 billion. Earnings per share (EPS), meanwhile, are expected to grow to $28.71, up 21%.
Chipotle Mexican Grill
Sometimes a high price seems to define how a stock is perceived. Case in point: ChipotleMexicanGrill(NYSE: CMG).
Since its shares debuted via an initial public offering (IPO) on Jan. 26, 2006, Chipotle's shares climbed from around $40 to over $2,300. Yet, in all that time, the company has never executed a stock split.
Nevertheless, investors may finally get their wish in 2024. Recent stock splits from high-profile companies like Amazon, Alphabet, and Tesla sparked renewed retail interest. For their part, Amazon and Alphabet recently set new 52-week highs.
In any event, Chipotle's stock is pricey -- even if the company executes a split. That's because shares trade at a high price-to-earnings (P/E) multiple -- and that is not affected by a stock split. With a forward P/E of 52x, Chipotle is far more expensive than its fast food peers like McDonald's (25x), Starbucks (24x), and Wendy's (20x).
CMG PE Ratio (Forward) data by YCharts
Chipotle is a red-hot stock, but investors should understand that even after a split, shares would remain expensive.
Nvidia
Finally, Nvidia(NASDAQ: NVDA) rounds out the list of most anticipated stock splits for 2024.
The company, whose stock is the top-performing stock in the Nasdaq-100 with a staggering 235% year-to-date gain, must be considered the big winner of 2023. Demand for its high-powered graphics processing units (GPUs) -- the brains behind today's cutting-edge artificial intelligence (AI) innovations -- is sky-high. As a result, Nvidia shares now trade for almost $500 apiece.
While it has only been two and a half years since Nvidia last split its shares (in July 2021), the company may choose to do so again in 2024. After all, the last share split (a 4-for-1 split) was announced when shares were trading in the $560 range.
Given how quickly Nvidia is growing -- and analyst estimates are rising -- it is hard to pin down a valuation for Nvidia shares. Nevertheless, the stock's volatility means Nvidia isn't a good fit for every investment portfolio.
That said, long-term investors willing to hold for many years to come would be wise to consider adding Nvidia shares now. The AI revolution is still in the early innings, and AI chipmakers like Nvidia stand to reap enormous profits because of that.
And, at any rate, another Nvidia stock split would help more retail investors participate, and that would be a great thing.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Alphabet, Amazon, McDonald's, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Chipotle Mexican Grill, Nvidia, Starbucks, and Tesla. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy.
