See Stock Splits: 2 Big Growth Stocks Are Up 322% and 861% in 7 Years, Buy Now, Hold for the Long Term

Stock splits not only make a company’s stock more accessible by lowering its stock price, but they can also create buying opportunities for investors. In other words, if the stock price has risen significantly enough to require a stock split, the company needs to do the right thing.

But investors don’t have to wait for the split to happen. A more prudent strategy is to find stocks that have performed well in the past and evaluate them as potential investments. for example, Hub Spot (Herb 2.03%) and MasterCard (mom -0.24%) Over the past seven years, they have increased by 861% and 322%, respectively.

Both companies qualify as stock split candidates after earning profits, but the stock is worth buying whether a split occurs or not. Here’s why:

1. HubSpot is a leader in marketing automation and CRM software.

HubSpot specializes in customer relationship management (CRM). The platform consists of productivity applications for sales, marketing, and customer service, as well as solutions for content management and commerce. These tools help our customers generate leads, convert leads into customers, and build lasting customer relationships.

HubSpot started out as marketing software and remains a leader in marketing automation. However, the company has successfully expanded into CRM by focusing on underserved small and medium-sized businesses (SMBs). Clients in that market segment find our premium pricing, tiered product offerings, and simple software integration suite attractive. In fact, HubSpot is the top CRM vendor among SMBs, according to research firm G2.

HubSpot reported solid financial results for its third quarter. Customer count increased 22% to over 194,000, and subscription revenue per customer increased 3%. As a result, revenue increased 26% to $558 million, and non-GAAP (adjusted) net income increased 138% to $83 million. Investors should expect similar momentum going forward as the company continues to gain share in CRM, a market expected to grow about 14% annually through 2030, according to Grand View Research.

HubSpot regularly brings new products and features to the market to expand the value proposition for our customers. Most recently, the company added software modules for its operations and commerce teams, revamped its sales module, and began rolling out artificial intelligence capabilities across its platform to automate tasks like email drafting and marketing copy.

With that in mind, HubSpot values ​​its market value at $51 billion. Morgan Stanley Analysts expect the company to grow its earnings at 23% annually over the next five years. Considering its strong presence in CRM, such a prediction seems reasonable. To that end, the current valuation of 12.2 times sales seems somewhat cheap. This is especially true considering that the three-year average is 16.8 times sales. Investors should feel confident buying a small position in this growth stock today.

2. Mastercard is a leading payments company with an economic moat.

Mastercard operates one of the largest payment networks in the world. 3rd place (behind) Visa We use UnionPay for purchase transactions, but we use Visa first at merchant acceptance locations. The most obvious benefit of this scale is strong network effects, but it also provides a significant cost advantage for Mastercard.

In particular, the company earns higher margins than smaller competitors such as: american express and paypal This is because you can spread the cost over more transactions. This means Mastercard can sustain its benefits by investing more aggressively in product development and marketing. Suffice it to say that Mastercard benefits from the nearly insurmountable economic moat that Warren Buffett prizes in business.

Mastercard reported solid financial results for the third quarter. Revenues increased 14% to $6.5 billion, driven by strong growth in dollar volume and processed transactions, while non-GAAP net income increased 26% to $3.39 per diluted share. As digital payments become increasingly prevalent, investors have every reason to expect similar momentum going forward.

Mastercard recently received approval to process payments in China, making it the second foreign company after American Express to gain direct access to the large market. Visa applied for the license three years ago, but Chinese regulators have yet to make a decision. This could be a strong tailwind for Mastercard in the coming years.

With this in mind, global digital payments revenue is expected to grow 6.2% annually through 2027, but Mastercard will likely grow much faster than the wider market given its size. of course, dawn of fame Analyst Brett Horn expects the company to grow sales by 12% annually over the next five years. This makes the current valuation of 16x sales seem reasonable, especially when the three-year average is 18.3x sales. Investors should feel comfortable buying a small position in this growth stock today.