7 Stocks to Buy Before Their Upcoming Stock Splits


  • Cintas (CTAS): This corporate identity uniform provider is riding strong momentum and megatrends. It announced a 3-for-1 stock split effective September 2024.
  • Broadcom (AVGO): A leading semiconductor company benefiting from the AI boom, with a stock split on July 12 set to attract more investors.
  • Chipotle Mexican Grill (CMG): Despite a premium valuation, this fast-casual chain’s 50-for-1 stock split on June 25 could make shares more attractive.
  • Continue reading for the complete list of the stocks to buy before their upcoming splits!
stocks to buy - 7 Stocks to Buy Before Their Upcoming Stock Splits

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If you’re looking for stocks to buy before their stock splits, there are many things you need to keep in mind. Firstly, you should keep the fundamentals and valuations in mind before you dive in before a stock split. A stock split alone is unlikely to yield massive returns, and a lot of the news is priced in when the split is announced. That said, stock splits have caused a notable short-term price increase but also a decrease immediately after the stock split. Thus, you should do your own due diligence, as normal with any company that is about to undergo a stock split.

This doesn’t mean that you shouldn’t screen for stock split stocks. When a company does a stock split, it usually means they are seeing a lot of bullish momentum, likely correlated to strong fundamentals and a rosy outlook going forward. As such, these stocks could deliver strong returns going forward, and I’ll be discussing seven of these stocks in this article.

Cintas (CTAS)

A hand reaches for an article of clothing on a hanger from a rack labeled XL.
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Cintas Corporation (NASDAQ:CTAS) provides corporate identity uniforms and related business services. The company is riding high on several megatrends and tailwinds across its well-diversified business segments. I believe Cintas stock remains one of the most consistent and stable in the market, having gained an impressive 27% over the past six months to reach $711 as of writing.

Management is making smart moves to keep this momentum going, including the recently announced 4-for-1 stock split. Shareholders of record on September 4, 2024, will receive three additional shares for each share held, with distribution set for after market close on September 11, 2024. While the stock is quite expensive at current levels, I wouldn’t be surprised to see it climb even higher post-split if the company continues exceeding expectations.

Cintas delivered robust Q3 FY2024 results, with revenue growing 9.9% to a record $2.41 billion and diluted EPS surging 22.3% to $3.84. This stock split could further energize its trajectory here.

Broadcom (AVGO)

broadcom (AVGO) logo outside office building
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Broadcom (NASDAQ:AVGO) is a leading semiconductor company that designs and develops a wide range of products. In Q2, Broadcom’s revenue soared 43% year-over-year to $12.5 billion, driven by the VMware acquisition and the AI boom. Excluding VMware, organic revenue still jumped an impressive 12%, largely thanks to AI revenue skyrocketing 280% to $3.1 billion.

I believe Broadcom is one of the best-positioned chip stocks to ride the AI and data center megatrends. By serving semiconductor companies rather than the end market directly, Broadcom insulates itself from intense competition while still benefiting from the broader chip demand surge. That said, there is significant China exposure here that could keep the stock depressed if geopolitical troubles fire up more.

AVGO revenue by region. Stocks to buy
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Source: Chart courtesy of GuruFocus.com

This unique position has propelled the stock to a stunning 108% gain over the past year. With Broadcom trouncing Q2 revenue estimates by nearly 4% and the upcoming stock split poised to attract more investors, I’m bullish that this chip leader has plenty of room to run. If you’re looking for a high-conviction way to play the AI and data center gold rush, Broadcom looks like a compelling buy ahead of its 10-for-1 stock split on July 12.

Chipotle Mexican Grill (CMG)

a pedestrian walks past a Chipotle, CMG stock
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Chipotle Mexican Grill (NYSE:CMG) operates a chain of fast-casual restaurants specializing in Mexican-inspired cuisine. The company’s Q1 report posted 7% comp sales growth driven by over 5% transaction growth. Restaurant numbers are also growing fast.

Chipotle operated restaurants chart
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Source: Chart courtesy of GuruFocus.com

Restaurant stocks have been on a tear lately, and Chipotle is no exception. Its stock has climbed nearly 372% over the past year. Despite its lofty $3,420 price tag, I think the upcoming 50-for-1 stock split on June 25 will make CMG shares more attractive to a broader range of investors.

However, it’s important to note that Chipotle trades at a significant premium compared to other restaurant businesses. I would be cautious about expecting substantial medium-term gains. Nonetheless, the long-term potential here looks very bullish to me.

Barrett Business Services (BBSI)

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Barrett Business Services (NASDAQ:BBSI) provides business management solutions for small and mid-sized companies. I believe BBSI is well-positioned to capitalize on the megatrends of automation and a strong labor market.

The company reported gross billings increased 7% YOY in Q1, driven by an 11% increase in worksite employees from new client additions. This proves that businesses are outsourcing HR functions to focus on their core competencies. BBSI’s client retention also continues to trend better than pre-pandemic levels.

While the company reported a quarterly loss of 2 cents per share, analysts expect BBSI to be solidly profitable for all of 2024. The stock has surged 53% over the past year and is trading at a premium valuation relative to its business size. However, BBSI has announced a 4 for 1 stock split. The new shares will be distributed on June 21, 2024, and trading will resume on a split-adjusted basis on June 24, 2024.

L’Air Liquide (AIQUY)

Factory pipes and towers at sunset
Source: Shutterstock

Air Liquide SA (OTCMKTS:AIQUY) is a French multinational company that supplies industrial gases and services to various industries worldwide. I believe AIQUY is one of the most solid long-term stocks you can buy right now. This is the sort of stock you buy and let compound for many years or even decades.

AIQUY operates in a stable industry with consistent demand, which has helped it deliver steady returns over the years. While it may not offer explosive growth, the upcoming 11-10 stock split on June 24 could boost the compounding effects for long-term investors.

Moreover, Air Liquide’s 1.74% dividend yield sweetens the deal for income-oriented investors. AIQUY remains a top pick for investors seeking a reliable, long-term compounding machine.

United States Lime & Minerals (USLM)

Macro of silver
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United States Lime & Minerals (NASDAQ:USLM) manufactures lime and limestone products. USLM stock has been soaring higher than most expected, and I’d say the near-term potential would be muted if it wasn’t for the upcoming 5:1 stock split on July 15. Prices have been supported by underlying fundamentals, but a cooldown in profitability could throw it off track.

USLM price vs EPS chart
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Source: Chart courtesy of GuruFocus.com

In Q1 2024, USLM’s revenues grew 7.4% to $71.7 million as higher selling prices offset lower sales volumes. Gross profit surged 27.6% to $30.6 million on those price increases and lower costs like cheaper natural gas. Net income jumped 31.2% to $22.4 million or $3.92 per share.

While construction demand fell, it was partially offset by higher industrial demand. Management expects construction to pick back up going forward. With alternative assets gaining popularity and USLM’s strong bottom line growth, I think it’s a long-term buy that could deliver more dividend hikes ahead.

However, opinions are mixed on the stock. The 5-for-1 stock split should drive near-term interest, but investors should still be cautious. I’m bullish long-term as USLM rides these megatrends.

Sony Group Corporation (SONY)

Sony logo on the side of a building at its offices in Silicon Valley.
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Sony Group Corporation (NYSE:SONY) is a global leader in consumer and professional electronics, gaming, entertainment, and financial services. I believe Sony’s stock is a compelling buy ahead of its upcoming 5-for-1 stock split in October, as the company is riding several powerful megatrends that should drive long-term growth.

In the gaming segment, Sony’s PlayStation 5 console is seeing robust demand, with nearly 60 million units sold to date. Hit games like Hell Divest 2 are shattering sales records, while the company’s aggressive studio acquisitions like Bungie are fortifying its content pipeline.

Beyond gaming, Sony is capitalizing on the explosive growth in streaming entertainment through its music and video platforms. The company’s imaging sensors are also poised to benefit from the proliferation of cameras in smartphones, EVs, and IoT devices.

With sales hitting a record 13 trillion JPY and operating income surging to 1.2 trillion JPY in fiscal 2023, Sony’s financials are expanding impressively. I expect these tailwinds to keep Sony’s stock on an upward trajectory. That said, you should keep an eye on Japan’s currency devaluation before you make a decision on whether or not you want to buy SONY.

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

Article printed from InvestorPlace Media, https://investorplace.com/2024/06/7-stocks-to-buy-before-their-upcoming-stock-splits/.

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