After the stock split for Alphabet and Amazon, here’s who’s next

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Whether you slice a pie into 10 pieces or 100 pieces, it should not affect the value of the pie. But in the stock market, the stock split – which cuts shares into smaller pieces – can have some significant consequences.

According to Bank of America, S&P 500 companies that have announced stock splits since 1980 returned an average of 25.4 percent over the next 12 months, compared to the S&P 500’s average return of nine percent in the same weather.

In fact, the bank said that after the split was announced, these stocks also exceeded the benchmark index in the three- and six -month periods as well.

“The underlying strength in the company is a major driver of high prices,” Bank of America analysts wrote in a note to investors last week.

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“Once the split is executed, investors who want to gain or increase exposure can start to rush for the opportunity to buy.”

2 stock splits have been the headlines so far in 2022

In Feb. 2, Google’s parent company Alphabet announced a 20-for-1 stock split along with its latest earnings report. The stock rose 7.5 percent in the next trading session.

Amazon announced a 20-for-1 stock split and a US $ 10 billion stock buyback plan on March 9. Shares of the e-commerce giant climbed 5.4 percent the next day.

By dividing a portion into smaller pieces, each piece will have a lower price, meaning it can get more interest from retail investors. However, this does not change the company’s core fundamentals.

That said, amid widespread market selling and today’s geopolitical crisis, stock splits from high-quality companies could be one of the few things that will make investors happy in the volatile 2022.

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And more companies can follow. Bank of America analysts identified several S&P 500 companies with high share prices. Here’s a look at three that are particularly attractive to the bank.

And if you’re interested in buying any of these stocks, consider doing so through a new trading platform that lets you buy fractions of expensive shares.

Booking Holdings (BKNG)

In the industries affected by the COVID-19 pandemic, travel took one of the most serious hits.

Shares of Booking Holdings, one of the leading providers of online travel services, fell in early 2020. As the stock gradually disappeared, it was far from smooth sailing. Year to date, BKNG has dropped by 19 percent.

It’s not hard to see why investors are cautious. Booking Holdings operates six major brands: Booking.com, Priceline, Agoda, Rentalcars.com, Kayak and OpenTable. As the global economy has almost reopened, the unknown scope and length of the pandemic could continue to affect demand for travel products.

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However, the company’s business has come a long way since the early days of the pandemic. In 2021, Booking Holdings ’total travel bookings reached US $ 76.6 billion, representing a 116 percent increase since 2020. Meanwhile, total revenue increased 61 percent to US $ 11 billion.

Right now, Booking Holdings trades at approximately US $ 1,990 per share, making it one of the stocks with the highest market price.

Bank of America has a “buy” rating on BKNG and a target price of US $ 3,100-approximately 56 percent above current levels.

ServiceNow (NOW)

Cloud software provider ServiceNow has served long -term investors well: Shares have risen more than 460 percent over the past five years.

The platform helps enterprise customers automate their IT tasks and workflows.

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The company has developed an iterative business model. In Q4 of 2021, subscription revenue will make up 94 percent of its total revenue.

And it doesn’t stand still. In Q4, subscription revenue rose 29 percent year-over-year to US $ 1.52 billion. Total revenue reached US $ 1.61 billion, also up 29 percent.

Management sees strong growth momentum. For 2022, the company expects ServiceNow subscription revenue to increase another 28 percent per year on a consistent monetary basis.

The stock, however, is not immune to recent sales in growth -oriented technology names. Year to date, NOW shares have dropped 20 percent to approximately US $ 500 each.

Bank of America sees a rebound on the horizon as it has a “buy” rating on ServiceNow and a target price of US $ 680, indicating a potential increase of 36 percent.

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TransDigm Group (TDG)

TransDigm is an aerospace manufacturing company that makes parts for both commercial and military aircraft.

It has a wide range of product offerings, from mechanical/electro-mechanical actuators to cargo loading, handling and delivery systems.

Although the company doesn’t often make headlines, it deserves an investor’s attention for a very simple reason: About 80 percent of TransDigm’s sales come from products for which it’s the sole source supplier. This gives the company significant pricing power.

In Q4 of 2021, TransDigm generated US $ 1.19 billion in net sales, representing an eight percent increase per year. Adjusted earnings per share improved 52 percent from a year ago to US $ 3.

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The shares dropped 3.6 percent in 2022 to US $ 618 each. To put that in perspective, the S&P 500 has fallen 13 percent year to date.

Bank of America has a “buy” rating on TransDigm. At a target price of US $ 790, the bank sees an approximately 28 percent increase in the company.

But if you want to invest outside of stocks, consider fine art. Blue-chip art is known to be virtually unrelated to the stock market, making it an ideal investment alternative, now available to day-to-day investors through a new trading app.

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