A surge in popularity of stock splits has been the focus of attention in 2024, as a number of high-profile stocks have taken the plunge. Companies typically take this path after years, even decades, of strong operational and financial results that have pushed stock prices out of reach for some investors. Although a stock split doesn’t change the underlying value of the company, it makes the shares more affordable to employees and ordinary investors, a reason companies often cite as the primary motivation for splitting.
Investors should, however, focus on the strong results that ultimately led to the stock split, as this is historically an indicator of a company that is firing on all cylinders, which is a great reason to own the stock.
Let’s take a look at two companies that still have significant upside prospects, according to some Wall Street analysts.
Nvidia: implied increase of 59%
The first split action with rising mounds is Nvidia (NASDAQ:NVDA)The chipmaker was already the gold standard for graphics processing units (GPUs) used by gamers and in data centers. But the advent of generative artificial intelligence (AI) early last year gave its business a boost.
The company is described as a “pickaxe and shovel company”. This reference to investing has its origins in a famous quote attributed to Mark Twain: “During the Gold Rush, it’s a good time to be in the pickaxe and shovel business.” » For the AI gold rush, Nvidia is providing the picks and shovels.
The parallel processing capability of Nvidia GPUs was revolutionary for rendering realistic images in video games. It allows them to run a multitude of mathematical calculations simultaneously. It turns out that this same feature works just as well for processing AI.
Nvidia’s recent results show why most Wall Street analysts are bullish. For its fiscal 2025 first quarter (ended April 28), Nvidia’s revenue jumped 262% year over year to a record $26 billion, while earnings per share (EPS) jumped 629% to $5.98. The company’s data center segment, which includes processors used for AI, became the company’s largest revenue generator, with revenue rising 427% to $22.6 billion.
Nvidia recently completed its massive 10-for-1 stock split, and despite gains of over 194% over the past year (as of this writing), Wall Street remains remarkably bullish. Rosenblatt analyst Hans Mosesmann raised his price target to $200 while reiterating a buy rating on the stock. That represents a potential gain for investors of 59% from Tuesday’s closing price.
Accelerating demand for AI-centric processors is the foundation of the analyst’s thesis, but he believes the secret sauce is Nvidia’s proprietary software paired with its best-in-class chips.
“We expect this software aspect to grow significantly over the next decade in terms of overall sales mix, with valuation trending upward due to sustainability,” Mosesmann wrote. The analyst’s price target suggests Nvidia’s market will soar to nearly $5 trillion over the next year.
Despite the stock’s epic run over the past year, Wall Street remains remarkably bullish on Nvidia. Of the 57 analysts who issued a rating on the stock in May, 53 rated it a buy or strong buy, and none recommended sale.
Celsius Holdings: 75% upside potential
Another fractional stock with significant upside potential is Titles in Celsius Titles (NASDAQ: CELH)The company’s focus on health-focused energy drinks has been a hit with consumers. It is the third-largest and fastest-growing energy drink brand, contributing 47% of total industry growth in the first quarter, outpacing its biggest rivals Red Bull and Monster drink.
Celsius occupies an enviable position in a growing sector. The energy drink category has continued to generate robust growth over the past three years, even as the broader beverage category has contracted – and Celsius is leading the charge.
In the first quarter, revenue rose 37% from a year earlier to $356 million, while diluted EPS jumped 108%. It’s always encouraging to see profits growing faster than revenue, because it shows that a company has achieved the scale needed to bring more revenue to the bottom line.
The company’s sales more than doubled last year thanks to its partnership with PepsiCowhich led the drinks and snacks giant to invest $550 million in Celsius, take an 8.5% stake in the company and sign a long-term distribution agreement. This is a double-edged sword, however, as Celsius now faces tough comparisons after such an exceptional year.
Celsius Holdings completed its 3-for-1 stock split late last year on the back of a strong track record. However, fears of slowing growth have hurt the stock, which has lost 42% over the past month, but some on Wall Street remain undeterred. Jefferies analyst Kaumil Gajrawala has set a $98 price target and a buy rating on the stock. That represents a potential gain for investors of 75% from Tuesday’s closing price. The analyst noted that the decline is “normal in the second year of a domestic distribution agreement” and advised investors to ignore the “near-term noise.”
The analyst isn’t the only one bullish on Celsius. Of the 16 analysts who issued a review on the stock in May, 14 rated the stock a buy or strong buy, and none recommended sale.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat by buying the best-performing stocks? Then you’re going to want to hear this.
On rare occasions, our team of expert analysts issues a “Double Down” Action Investors recommend companies that they believe are on the verge of breaking out. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Amazon: If you invested $1,000 when we doubled our efforts in 2010, you would have $22,283!*
Apple: If you invested $1,000 when we doubled down in 2008, you would have $40,456!*
Netflix: If you invested $1,000 when we doubled down in 2004, you would have $369,059!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns June 24, 2024
Danny Vena holds positions at Monster Beverage and Nvidia. The Motley Fool holds positions and recommends Celsius, Monster Beverage and Nvidia. The Motley Fool has a disclosure policy.
2 Split Stocks to Buy Before They Surge 75%, According to Some Wall Street Analysts was originally published by The Motley Fool
News Source : finance.yahoo.com
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