Prediction: Here are the next three stock splits on Wall Street that will follow Walmart and Chipotle Mexican Grill.

Volatility is a common phenomenon when investing money on Wall Street. Since the start of this decade, the three major stock indexes have fluctuated between bear and bull markets several times.

When volatility and uncertainty arise, both professional and individual investors have a habit of seeking safety, which often outperforms stocks with well-defined competitive advantages. While “FAANG stocks” are great examples of the type of leadership investors have sought during periods of stock market turmoil, it is stocks that have enacted splits that have truly served as a safety valve during periods of heightened volatility and uncertainty.

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Walmart and Chipotle Mexican Grill join the elite in 2024.

A “stock split” is an event that allows a public company to seemingly change its stock price and number of shares outstanding. The reason this is a cosmetic change is because the stock split does not affect the company’s market capitalization or operating performance. Stock splits are used solely for the purpose of increasing a company’s stock price, either by making the stock nominally cheaper for retail investors who do not have access to fractional share purchases (known as a “future stock split”) or by ensuring minimum listing standards. . It met on a major stock exchange (called a “reverse stock split”).

Although there have been companies throughout history that have achieved great success after implementing reverse splits, most of the attention has been focused on high-flying companies that have implemented forward splits.

Since mid-2021, nearly a dozen high-profile companies have announced or completed spinoffs. The newest member of this elite stock split club is the retailer. walmart (WMT -0.12%) fast casual restaurant chain Chipotle Mexican Grill (CMG -1.35%).

In late February, Walmart enacted a 3-for-1 split designed to encourage Walmart employees to purchase nominally cheaper company stock. Walmart has consistently enjoyed a scale advantage over its competitors, which allows it to purchase products in bulk and undercut prices at most grocery chains and local stores. This helps explain long-term performance and the need for stock splits.

Likewise, Chipotle’s stock split also makes the stock nominally cheaper for employees (i.e., to encourage stock ownership and investment participation). Chipotle Mexican Grill plans to complete a 50-for-1 forward split in late June if it receives approval from shareholders.

Thanks to its fresh food/freezer-free promise and limited menus that shorten wait times at restaurants, Chipotle’s stock price has soared more than 14,600% since its January 2006 IPO.

Prediction: These big names could be Wall Street’s next stock splits.

Walmart and Chipotle Mexican Grill are unlikely to be the only high-profile stock splits announced this year and early 2025. I believe three big names are poised to follow in the footsteps of Walmart and Chipotle and become the next stocks on Wall Street. Split the stock.

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costco wholesale

The first wonder company that already has the tools and intangibles needed to join the elite group of stock split stocks is Warehouse Club. costco wholesale (expense -1.53%).

Excluding the 1994 spinoff of Price Enterprises, Costco has conducted three stock splits, the most recent of which occurred in January 2000. After 24 successful years without future splits, a single share of Costco Wholesale will return investors approximately $787. .

Like Walmart, Costco has always used its size and deep pockets to its advantage. Because you buy products in bulk, the cost per unit of product you purchase is lower. The company can then pass these savings on to its members and lower prices at grocery stores and mom-and-pop stores. Consistently low grocery prices are a big draw for Costco.

Costco’s membership model is another key reason Costco performs well over the long term. The company’s annual membership fees of $60 and $120 are high margin and allow you to start making money right away. But Costco often uses these fees as insulation to undercut prices at grocery chains and local stores.

Another thing membership does is encourage consumers to remain loyal to Costco. Paying $60 or $120 a year will make members think twice about spending their money elsewhere.

I would be remiss if I didn’t mention that Costco stock is historically valued at 45 times future annual earnings. A company’s board of directors may be encouraged to announce a stock split to generate interest in the stock at such a high valuation.

FICO

A second standout company that could follow the path of Walmart and Chipotle and become Wall Street’s next stock split is a software and analytics provider. FICO (FICO 0.29%) (Formerly known as “Fair Isaac”).

The company behind the legendary FICO credit scores has completed four stock splits since going public in July 1987. However, the last forward split (3:2 split) occurred 20 years ago, in March 2004. On May 10th, a single share of FICO reached nearly $1,329!

FICO is a perfect example of a business that has benefited enormously from economic uncertainty. The company’s Score segment provides credit scoring solutions to help businesses make more informed lending decisions. We also offer B2C solutions such as myFICO.com subscriptions. B2B sales, which account for more than half of FICO’s revenue, surged 28% in the first six months of this fiscal year.

FICO’s software division hasn’t been idle either. The division, which provides analytics and decision-making solutions spanning customer engagement, fraud detection, marketing and professional services, saw revenue increase 8% through the first half of fiscal 2024.

What makes FICO a strong candidate for a stock split is the fact that previous stock splits occurred while the company’s stock was worth less than $100. Of course, partial stock purchases by many online brokers have made the company’s stock price somewhat controversial. But with FICO’s stock sitting at its highest nominal price in history, it’s logical to expect a split sooner rather than later.

Broadcom

The third surprising company that could become Wall Street’s next stock split, following Walmart and Chipotle Mexican Grill, is the semiconductor titan. Broadcom (AVGO 0.35%).

Before merging with Avago Technologies in 2016 (Avago retained the Broadcom name), Broadcom completed three stock splits. However, the new owner has not conducted a stock split since 2016. A single stock of Broadcom will set investors back approximately $1,333!

Broadcom’s outstanding achievements since its opening in 2023 are all related to the artificial intelligence (AI) revolution. Last April, the company unveiled its Jericho3-AI chip, which seamlessly connects up to 32,000 AI-accelerated graphics processing units in high-performance data centers. Broadcom has the tools that industry-leading companies can use to train large-scale language models and run generative AI solutions.

But there’s more to Broadcom than AI. It generates most of its revenue from selling wireless chips and accessories used in next-generation smartphones. The rollout of 5G continues to increase device replacement cycles, increasing demand for Broadcom’s next-generation wireless solutions and accessories.

Broadcom also enjoys rapid growth potential in the ancillary and automotive sectors. We provide connectivity and LED solutions for next-generation vehicles, semiconductor solutions for various medical systems, and optical sensors for industrial automation equipment.

While Broadcom’s future looks bright, it may need to split the stock ahead of time to keep the stock available to investors without access to fractional share purchases.