Stock Split Watch: 3 Top Stocks That Look Like They’re Ready to Split

Stock splits attract a lot of attention among investors.

While they don’t change the fundamentals of a stock, they act as a signal from management that it expects the stock to continue to grow. That’s because stock splits represent important milestones in a stock’s growth and they make the price of an individual stock lower, making it more affordable for retail investors.

There is also some evidence that stocks outperform after a stock split, which may be due to the growth momentum in the stock that led to the split and management’s confidence that the stock will continue to move higher.

If you’re looking for the next stocks to split, here are three that could be next.

1. Reservation of assets

Reservation of titles (Bkng -0.85%) is the world’s largest online travel agency, and it has never had a stock split in its history, although it did do a reverse split in 2003 when it was on the verge of bankruptcy after the dot-com bubble burst.

Since then, Booking’s shares have soared, and its stock price is now approaching $4,000 a share, putting it above any other U.S. stock except the homebuilder. Network Video Recorder (NVR) And Berkshire Hathaway Class A shares.

CEO Glenn Fogel recently toned down expectations of a stock split, as many other high-priced companies have split their shares. In an interview with Barron’sHe responded to a question about a possible stock split by saying: “I don’t think I want that kind of investor.”

Fogel is not alone in sharing this sentiment. Amazon Amazon founder Jeff Bezos also brushed off investors’ short-term concerns, insisting he was focused on the long term. However, Amazon ended up splitting its shares after Bezos handed over the reins to current CEO Andy Jassy.

Despite Fogel’s comment, a Booking stock split appears increasingly likely if the stock price continues to rise.

2. AutoZone

AutoZone (AZO 1.01%) is also one of the most expensive stocks on the market based on individual share price and, like Booking, has been a long-time outperformer.

AutoZone and its rival O’Reilly Automobile have long generated exceptional returns by adding new stores and serving a growing market for auto parts, especially as the average age of a vehicle on the road is now over 12 years.

AutoZone stock is now trading at over $3,000 per share. The company hasn’t had a stock split since 1994, and since then the stock price has increased by about 42,000%.

The auto parts stock has also risen steadily over the past five years in a volatile stock market, demonstrating the strength of its recession-proof business model.

The company hasn’t announced any plans for a stock split, but it would make sense to do one, especially since the stock appears well positioned to continue its gains.

3. MercadoLibre

Finally, Free market (MELI 0.22%) The stock also appears to be a good candidate for a stock split. The Latin American e-commerce leader just crossed the $2,000 per share mark and, like the other stocks on the list, has been a consistent winner in the stock market.

MercadoLibre has grown over the years by expanding its operations into a third-party marketplace, a digital payments network, a logistics service and lending activities.

Although MercadoLibre appears to have been eligible for a stock split for some time due to its share price, which has been above $1,000 for most of the past five years, the company has never split its stock price in its history, which dates back to its IPO in 2007.

MercadoLibre has not commented on a potential stock split, but it seems likely that one will happen if the stock continues to rally. The company continues to grow rapidly and margins are expanding, which is helping the stock rally further.

Don’t be surprised to see MercadoLibre split its shares in the coming years, if not sooner.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman holds positions at Amazon and MercadoLibre. The Motley Fool holds positions at and recommends Amazon, Berkshire Hathaway, Booking Holdings, MercadoLibre, and NVR. The Motley Fool has a disclosure policy.