In the world of finance, there are always exciting trends and opportunities to explore. While artificial intelligence (AI) has been a hot topic on Wall Street, stock splits have also been making waves in 2024. These splits have played a significant role in driving major stock indexes to record highs. A stock split is an event where a publicly traded company adjusts its share price and outstanding share count by the same factor. It is important to note that these adjustments are cosmetic and do not affect a company’s market cap or operational performance.
At Extreme Investor Network, we believe in providing our readers with valuable insights that go beyond the surface-level information available elsewhere. One key trend in 2024 has been the surge in stock splits among high-profile companies. These splits, especially forward splits like the 3-for-1 split completed by Walmart, aim to make shares more affordable for everyday investors. As we approach November, one standout stock-split stock has captured our attention as a compelling investment opportunity, while two others may be worth avoiding.
The unique stock that stands out as a screaming bargain is Sirius XM Holdings (NASDAQ: SIRI), which recently completed a 1-for-10 reverse split. This move was not to avoid delisting from the Nasdaq exchange but to attract institutional investors who typically steer clear of stocks priced below $5 per share. Sirius XM holds a monopoly as the only company with a satellite-radio license, giving it an edge in subscription pricing power.
Another factor that sets Sirius XM apart is its revenue model. While other radio providers rely heavily on advertising revenue, Sirius XM generates a significant portion of its sales from subscriptions. This steady cash flow, combined with a market-topping 4% yield and low forward-year earnings multiple, makes Sirius XM an attractive investment opportunity.
On the flip side, not all stock-split stocks are created equal. Super Micro Computer (NASDAQ: SMCI), a specialist in customizable rack servers and storage solutions, recently completed a 10-for-1 split. Despite a strong track record of sales growth and adoption of Nvidia’s GPUs in its servers, Super Micro has faced challenges, including allegations of accounting manipulation and a probe from the U.S. Justice Department. With uncertainties surrounding the company’s accounting practices and supplier relationships, caution is warranted.
MicroStrategy (NASDAQ: MSTR), an AI enterprise analytics software provider, executed a historic 10-for-1 forward split in 2024. While the company’s Bitcoin holdings have driven its market valuation, concerns have arisen about the premium placed on its crypto assets and the risky debt financing used to acquire more Bitcoin. With a declining software division and ambitious capital-raising plans, MicroStrategy’s operational risks outweigh its potential rewards.
At Extreme Investor Network, we aim to provide our readers with actionable insights and expert analysis to help them navigate the complex world of finance. Stay tuned for more exclusive content and investment opportunities that can help you make informed decisions and achieve your financial goals.