Always keep an eye on stock splits.
Look at Walmart (WMT), for example.
Back in February, the stock split 3:1 after the market closed on Friday, February 23. Post-split, we expected the stock to trade even higher because “cheaper” shares would bring in more retail interest – which is what happened.
Opening at $54.17 the following Monday, WMT has since run to $6156, and could push even higher. All because the “cheaper” WMT shares brought in more buying interest.
In addition, according to CNBC at the time, “According to Morgan Stanley research, the shares of a company that announced a stock split outperformed the S&P 500 by an average of 2.4% between the announcement and effective date, with a 68% hit rate. In the six months after the effective date, the newly split shares outperformed the index by 4.7%. Those results are based on data from 2000 to 2021.”
We may have another opportunity with shares of Chipotle (CMG).
At the moment, CMG trades at $2,916.46, which really isn’t an attractive buy price for many.
However, the company wants to split its shares 50:1, which is now subject. To shareholder approval at its June 6 annual meeting. If approved, says CNBC, “The shares are expected to begin trading on a post-split basis at market open on June 26, in what the company described would be one of the biggest stock splits in New York Stock Exchange history.”
Using today’s price of $2,916.48, it would drop the price of CMG to less than $59 a share.
And much like we saw with WMT, we could see a good deal of retail interest flood into CMG. Better, we don’t expect for CMG to stay around $59 for very long.
