BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (2024)

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1. NVR 2. Chipotle Mexican Grill 3. Broadcom 4. TransDigm Group 5. O'Reilly Automotive 6. Lam Research 7. Equinix 8. ServiceNow 9. BlackRock 10. Eli Lilly 11. Costco Wholesale 12. Nvidia 13. Intuit 14. United Rentals 15. KLA 16. Adobe 17. Cintas 18. Synopsys 19. Netflix 20. Thermo Fisher Scientific 21. Parker-Hannifin 22. UnitedHealth 23. Elevance Health 24. McKesson
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Markets

William Edwards

2024-02-15T14:18:32Z

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (1)

AP Photo/Richard Drew
  • The S&P 500 may see more lackluster returns with the Federal Reserve likely to keep rates higher.
  • Individual stocks that undergo a split could outperform, according to Bank of America.
  • Stocks trading above $500 per share are candidates for stock splits.

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (2)

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BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (3)

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BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (4)

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With the already above many strategists' year-end price targets and the Federal Reserve looking increasingly likely to keep rates higher for longer, it's possible the index will deliver more lackluster returns over the rest of the year.

If that happens, one source of outperformance could come from individual stocks that undergo a split, according to Bank of America.

In a stock split, a company increases the number of its shares on the market. For example, if one share of a company is worth $50 and they issue a 2-for-1 split, an investor would then get two shares worth $25 each for every share they own. Companies usually issue a stock split to make the entry price of their shares cheaper. This typically brings more cash into the stock, pushing up the price.

In a February 13 note, a team of strategists led by Jared Woodard said that companies that have issued stock splits have typically beaten the S&P 500 in the following year.

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"Historically, stocks have notched 25% total returns in the 12 months after a split is announced, compared to 12% for the broad index," Woodard said. "Splits have boosted returns in every decade including the early 2000s when the S&P 500 struggled."

But strong performance after a split is not a given, he said.

"Outperformance is no guarantee. While splits could be an indication of strong momentum, companies can struggle in a challenging macro environment," the note said. "Companies like Amazon, Google, Tesla, and Dexcom struggled in the 12 months after splits were announced in 2022 as interest rates spiked."

Woodard said stocks trading above $500 per share are most likely to issue a split, since their entry prices are more expensive than 95% of stocks in the S&P 500. Below, we've listed the 24 stocks in the S&P 500 that Bank of America also has a "Buy" rating on.

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1. NVR

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (5)

Markets Insider

Ticker: NVR

Sector: Consumer Discretionary

Source: Bank of America

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2. Chipotle Mexican Grill

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (6)

Markets Insider

Ticker: CMG

Sector: Consumer Discretionary

Source: Bank of America

3. Broadcom

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (7)

Markets Insider

Ticker: AVGO

Sector: Information Technology

Source: Bank of America

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4. TransDigm Group

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (8)

Markets Insider

Ticker: TDG

Sector: Industrials

Source: Bank of America

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5. O'Reilly Automotive

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (9)

Markets Insider

Ticker: ORLY

Sector: Industrials

Source: Bank of America

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6. Lam Research

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (10)

Markets Insider

Ticker: LRCX

Sector: Information Technology

Source: Bank of America

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7. Equinix

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (11)

Markets Insider

Ticker: EQIX

Sector: Real Estate

Source: Bank of America

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8. ServiceNow

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (12)

Markets Insider

Ticker: NOW

Sector: Information Technology

Source: Bank of America

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9. BlackRock

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (13)

Markets Insider

Ticker: BLK

Sector: Financials

Source: Bank of America

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10. Eli Lilly

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (14)

Markets Insider

Ticker: LLY

Sector: Healthcare

Source: Bank of America

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11. Costco Wholesale

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (15)

Markets Insider

Ticker: COST

Sector: Consumer Staples

Source: Bank of America

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12. Nvidia

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (16)

Markets Insider

Ticker: NVDA

Sector: Information Technology

Source: Bank of America

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13. Intuit

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (17)

Markets Insider

Ticker: INTU

Sector: Information Technology

Source: Bank of America

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14. United Rentals

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (18)

Markets Insider

Ticker: URI

Sector: Industrials

Source: Bank of America

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15. KLA

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (19)

Markets Insider

Ticker: KLAC

Sector: Information Technology

Source: Bank of America

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16. Adobe

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (20)

Markets Insider

Ticker: ADBE

Sector: Information Technology

Source: Bank of America

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17. Cintas

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (21)

Markets Insider

Ticker: CTAS

Sector: Industrials

Source: Bank of America

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18. Synopsys

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (22)

Markets Insider

Ticker: SNPS

Sector: Information Technology

Source: Bank of America

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19. Netflix

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (23)

Markets Insider

Ticker: NFLX

Sector: Communication Services

Source: Bank of America

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20. Thermo Fisher Scientific

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (24)

Markets Insider

Ticker: TMO

Sector: Healthcare

Source: Bank of America

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21. Parker-Hannifin

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (25)

Markets Insider

Ticker: PH

Sector: Industrials

Source: Bank of America

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22. UnitedHealth

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (26)

Markets Insider

Ticker: UNH

Sector: Healthcare

Source: Bank of America

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23. Elevance Health

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (27)

Markets Insider

Ticker: ELV

Sector: Healthcare

Source: Bank of America

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24. McKesson

BANK OF AMERICA: Buy these 24 companies that are most likely to split their stocks — a move that's historically led to a 25% return in the following 12 months (28)

Markets Insider

Ticker: MCK

Sector: Healthcare

Source: Bank of America

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