3 recent stock splits just waiting to be bought


After enjoying years of outsized gains, many companies have turned to stock splits to make stocks more affordable. Stock splits do not directly add to shareholder wealth. One hundred shares at $100 per share are worth the same as 1,000 shares at $10 per share.

However, falling nominal stock prices can increase liquidity and make whole stocks more affordable for retail investors. This increased interest could give new impetus to Amazon (AMZN 1.98%), DexCom (DXCM 2.58%)and Shopify (STORE -1.21%).

Long-term investors should pounce on this mega-cap stalwart while it’s on sale

Jake Lerch (Amazon): For Americans today, it’s nearly impossible to go 24 hours without interacting with an item that has been shipped, marketed, built, or otherwise supported by Amazon’s various business segments. Tech giant’s $477 billion annual revenue ranks just behind walmartis $576 billion. However, despite its size and importance, Amazon had a dismal 2022, plagued by many setbacks:

Still, investors shouldn’t dismiss Amazon as past its prime. Admittedly, the stock is down 33% since the start of the year, and the US economy could well be heading into a recession in the not too distant future. Still, some potential catalysts could help Amazon turn things around later this year, including:

Aside from the stock split, none of this is a given. But even if these scenarios do not boost the stock’s fortunes in 2022, Amazon remains a mainstay of the US economy. In fact, I argued that Amazon is a proxy for the US economy. And despite all the challenges besetting the US economy today, I have no doubt that it (and Amazon) will bounce back.

What makes Amazon even more appealing is that it’s cheap by historical standards. Its current price-to-earnings ratio is 54.7, well below its long-term average and close to its all-time low of 42, set earlier this year. Additionally, Wall Street is raising its earnings estimates for 2023. In the past 30 days, six companies have revised their EPS estimates up, with only one drop in guidance. Investors would be wise to consider Amazon now, as the stock is still trading significantly cheaper than at the start of the year.

Say goodbye to sore and messy fingers

justin pope (DexCom): Over 500 million adults worldwide are living with diabetes, a number that could reach over 780 million by 2045. Unfortunately, rising obesity rates around the world have made diabetes increasingly prevalent .

Measuring blood sugar traditionally requires a finger to take a drop of blood, which can be painful and inconvenient for patients.

DexCom sells a continuous glucose monitoring system consisting of a sensor that patients wear for up to 10 days, which measures glucose levels and sends the data to a smart device every five minutes. Traditional blood tests only measure glucose at this time; continuous monitoring is much more revealing, like using video rather than photography to tell a story.

You can see how smooth DexCom’s growth has been below; it turns out that providing a superior alternative in a large market creates good business results. The company is also profitable, generating cash profits through free cash flow and net profit (net income).

DXCM Revenue Data (TTM) by YCharts

DexCom won’t wow investors with hypergrowth; the company’s revenue increased 25% year-over-year in the first quarter of 2022 to $629 million. Instead, the company is growing steadily, poised for years of double-digit growth. Remember that over half a billion adults live with diabetes? DexCom sells at just 1.25 million, leaving an ocean of growth ahead of it.

Management recently completed a 4-for-1 stock split, bringing the stock price down to around $76 per share. Remember that stock splits make stocks more affordable, but do not change the fundamental valuation of the stock itself. Therefore, measures such as the price-to-sales (P/S) ratio are useful to examine. DexCom trades at a P/S of 12, about the company’s average over the past decade.

PS DXCM Ratio Chart

DXCM PS Ratio Data by YCharts

It may not be a bargain, but there should be plenty of room for investors with a long-term view and ready to let that double-digit growth build over the next few years.

This bullish deal hinges on more than just a stock split

will heal (Shopify): Shopify’s 10-to-1 stock split is expected to increase the stock’s appeal to retail investors. However, investors should not buy simply for the low nominal price.

Shopify has managed to stand out among e-commerce platforms with superior products and a large ecosystem. It invests in technology to provide fast and reliable service and offers many task-related tools such as a logo maker and QR code generator.

Its vast ecosystem includes tools such as a payment platform that supports transactions on all Shopify-supported sites. Its inventory management tools will also monitor the inventory of goods sold online and offline, which will make it more useful to many of its customers. Additionally, Shopify Capital can provide its customers with financing if needed.

Yet, the ecosystem addition that can permanently put it ahead of most of its peers is the Shopify Fulfillment Network (SFN). The SFN will store, package and ship the goods. Since most peers are tied to an identity as a software company, most won’t follow Shopify into the fulfillment industry. At best, they can outsource the execution to an outside party, like Wix.com‘s arrangement with Amazon.

According to Oberlo, this ecosystem has helped give Shopify a 32% market share among e-commerce platforms in the United States, making it the #1 e-commerce platform in the country.

But despite Shopify’s potential, the stock has lost nearly 80% of its value since November as growth rates slowed. The company reported $1.2 billion in the first quarter of 2022, and the 22% year-over-year increase slowed from the 57% revenue growth in 2021. Q1 losses were $1.5 billion, primarily due to $1.7 billion of unrealized equity. losses.

However, Shopify expects revenue growth to resume in the second half of 2022. Additionally, the 10 P/S ratio is near its lowest level in six years, making the stock more attractive to new investors. . While Shopify continues to stand out with its tools and ecosystem, it’s more like a buy-now stock.

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