The end of each year is a good time to reflect and come up with New Years Resolutions. Companies can make resolutions too, by rewarding investors with shareholder-friendly actions. A stock split may change absolutely nothing about a stock’s fundamentals and financials. Just don’t tell that to investors. Investors love their stock splits! It tricks them into thinking they are getting new shares for free. That’s not the case, of course, but the history of high-profile stock splits is quite positive.

Tactical Bulls is looking into 2025 and the reality is that there are just way too many stocks in the S&P 500 (or which could be in the S&P) where the actual stock prices make no sense at all. This is identifying 13 stocks that should at least consider announcing stock splits in 2025.

Stock market history favors splits. NVIDIA Corporation (NASDAQ: NVDA) and Chipotle Mexican Grill, Inc. (NYSE: CMG) were the two highest-profile splits of 2024. Super Micro Computer, Inc. (NASDAQ: SMCI) would have been much more memorable had it not been for its corporate blunders.

By splitting stocks, companies make it easier for new retail investors to buy into a stock. If a share price is $1,000 or $2,000 it may be too expensive to buy even 1 share of stock for many investors. Companies also need to have their shares priced where their employees can more easily buy stock in the company they work for. After all, it looks and sounds good when employees are invested in the company giving them their paycheck.

There are other considerations as well. Share prices that are too high can also make using stock options more difficult as the premiums for contracts are so high. Similar to employees, customers of a company often know a good investment when they see one. If a company has an average sale of under $100 at their registers, do they need to then have a $1,000 or $2,000 stock price?

There is also the liquidity factor in two ways: one that the higher-priced stocks have much lower share volume traded than lower-priced stocks AND two that market-makers and traders keep wider bid-ask spreads in stocks with higher prices than in lower-priced stocks.

DON’T ASK WARREN BUFFETT ABOUT SPLITS

Be advised that these are simple observations from a high-priced stock screen of the S&P 500 and other companies. This is in no way to be interpreted as investment advice, and it certainly is not a recommendation to buy or sell these stocks. There are many more issues like a company’s financials and business fundamentals which are more important than just the price of their stock.

You might not want to ask Warren Buffett what he thinks of a stock split, but shares of the Berkshire Hathaway Inc. (NYSE: BRK-B) are now around $480 per share — and the Berkshire Hathaway Inc. (NYSE: BRK-A) are now at $705,650. The B-shares trade about 3.8 million shares on average each day, for total dollar volume of about $1.82 billion. The A-shares trade only about 1,750 shares on an average day, for a total dollar volume of $1.23 billion per day.

A LOOK INTO STOCK SPLITS

Tactical Bulls has screened 13 of the top candidates that are in the S&P 500 or are large enough to be in the S&P 500 that should at least consider splitting their stocks in 2025. This is not a prediction, and it’s certainly not investment advice.

It would be unrealistic to believe that all 13 of these public companies will announce a stock split. Again, some companies are just not fans of splits. And it would also be more than naive, absent of positive fundamentals and shareholder-friendly efforts, to expect that the stocks would run higher on a stock split without additional positive news.

THE 13 SPLIT-RESOLUTION CANDIDATES

This list screened out companies which are also not as well-known to the public and to investors. NVR Inc. (NYSE: NVR) has the highest price of any S&P 500 stock at over $9,000 per share – but most do not even know the $28 billion homebuilder by name. Other companies like Transdigm Group Inc. (NYSE: TDG) and Mettler-Toledo International, Inc. (NYSE: MTD), both close to $1,250 per share, are candidates for splits but just are not well-known by the public.

Some companies have longer explanations than others, and some have been shown regarding their historical stock splits if any have been made. These have also been presented in alphabetical order to avoid the appearance of any ranking.

Autozone, Inc. (NYSE: AZO) now trades at nearly $3,200 per share. Even if a customer is happy with the offerings and enjoys the store so much they want to buy the stock, this is probably 5-times to 10-times what they spend in the store. Conducting a stock split may just be too big of a mental hurdle for the company because its stock buybacks have reduced the share count by close to 90% over the last 25 years or so. Maybe its board thinks the new shares would be dilutive even though the fundamentals measured per share adjust by the same ratios as a split.

Blackrock Inc. (NYSE: BLK) is the king of asset management firms and is king of ETFs with the iShares family. It has a $153 billion market cap and its $1,030 stock price makes it the highest financial price in the entire S&P 500. It’s now the king of ETFs as well with iShares, and CEO Larry Fink is considered one of the top 10 evangelists for bitcoin out there. A split would simply make the financial giant easier to invest in.

Booking Holdings Inc. (NASDAQ: BKNG) is a prime offender with a $5,225 share price. The one mental block for the company preventing a split may date back to 2003 when its stock price was so low it had to conduct a 1-for-6 reverse split. Still, this stock price is more expensive than most vacations booked through its sites. To make a big difference here the split would need to be 20-for-1 or 10-for-1.

Costco Wholesale Corporation (NASDAQ: COST) is one of the most respected and best growth stories in all of retail. Its stock price of $975.00 is also the highest stock price of all retail stocks in the S&P 500. Most retailers, particularly discount and big-box retailers, tend to go for stock prices under $100. The last stock split was a 2-for-1 split back in 2000. Why so long?

Eli Lilly & Co. (NYSE: LLY) has the highest stock price of any drug and biotech company in the S&P 500 and has been public since the 1800s. At $815 on last look, it was at $950 on multiple occasions earlier in 2024. The growth of Mounjaro for diabetes and Zepbound for obesity have boosted its stock to premium valuations versus drug peers and its dividend yield is now not even 1%. Eli Lilly’s last two stock splits were 2-for-1 splits and were back in the 1990s.

Equinix Inc. (NASDAQ: EQIX) is now a REIT, even if it operates high-tech data centers that are at the front of the AI expansion. Its $965 share price is the highest of all known data center stocks and public REITs alike in the S&P 500. Its dividend yield of 1.8% is quite low for a REIT but not out of line for an established technology stock. That said, similar to Booking (above), it endured a reverse-split of 1-for-32 back in 2002.

Fair Isaac Corporation (NYSE: FICO) may be in charge of your credit scores, but why on earth does it need to have a $2,332.11 stock price. Maybe it only wants to attract new investors with credit scores above 800… Enough said.

MercadoLibre, Inc. (NASDAQ: MELI) is not in the S&P 500 and it operates throughout Latin America with its headquarters in Uruguay. It is even referred to as “The Amazon of Latin America” by some investors. What’s interesting here is that, even after Amazon.com decided to split its stock in a 20-for-1 move, MercadoLibre is a $1,950 stock. This is the ADS price, but that represents more money in U.S. dollars than most of the people it operates in have access to at any given time. Even going back to 2007, and even when it went under $10 during the Global Financial Crisis, MercadoLibre has not conducted a stock split.

Netflix, Inc. (NASDAQ: NFLX) has the highest stock price of all streaming and media giants at $902. Its market cap is also $385 billion, and it pays no dividend. Netflix has split its shares before with a 7-for-1 split in 2015 (closer to $100 adjusted at the time) and a 2-for-1 split in 2004 (closer to $5 adjusted at that time).

O’Reilly Automotive, Inc. (NASDAQ: ORLY) was last seen at $1,246.00. This one is only 40% of the share price of Autozone but is still an auto parts seller and still over $1,000. Why?

ServiceNow Inc. (NYSE: NOW) is expanding its efforts in A.I. with Microsoft and Amazon’s AWS. Its $1,045 stock price is the highest of all application software companies in the S&P 500. It is also up almost 50% YTD and it has more than tripled in price since the start of 2020. Its stock has never split since it started trading in 2012.

Texas Pacific Land Corporation (NYSE: TPL) has been on fire as a pure-play Permian Basin player. It dates back to 1888 and is the corporate successor to Texas Pacific Land Trust as one of the largest landowners in Texas. It is the highest energy stock price in the entire S&P 500 by far at $1,500. Its stock is up almost 200% so far in 2024 and what is interesting here is that it already split 3-for-1 in early 2024. Is another split needed or should new investors just go buy a cheap acre of land in the middle of nowhere in hopes that there is something of value under the dirt?

W.W. Grainger Inc. (NYSE: GWW) has been a stock split candidate for some time. At almost $1,200 per share, the company offers literally millions of products for one-stop shopping in maintenance, repair, and operating products. Its stock is up 44% YTD. The company’s last two splits were both 2-for-1 and were done back in the 1990s. Its stock has also risen nearly five-fold over the last 10 years.