Stock split fever returns Walmart, Chipotle Stock Splits Could Impact These Top Stocks

The market loves stock splits. When a corporation splits its shares, it shows its success and management's optimism. Top stocks with strong performance usually split. Walmart's 3-for-1 stock split in February and Chipotle Mexican Grill's massive 50-for-1 split last week are the two newest stock-split stocks. Both stocks outperformed the market this year.

Unbeatable membership model Costco has outperformed for decades. Its unrivaled retail membership model drives consumer loyalty, traffic, and sales. A basic annual membership costs $60, but members save more than that on their annual expenditures. Costco sells bulk products with razor-thin margins to meet costs and generates money on fees.

Last year's sales growth was slow and even negative due to buyers reducing back on pricey items. Membership, traffic, and volume increased.

Sales rose 5.9% in fiscal 2024's second quarter (ending Feb. 18) due to 5.6% comparable sales growth and 5.3% traffic growth. EPS rose from $3.30 to $3.92. Membership fees rose 8.4% to $84 million and paid household members 7.8% to $73.4 million. At 92.9% in Canada and the U.S. and 90.5% globally, renewal rates remain strong.

Costco split its stock three times, the last 24 years ago. The stock has risen approximately 1,500% since then and 48% in a year. Currently, each share costs over $700. Costco is raising membership fees and offered a $15 special dividend this year. In their stock split announcements, Walmart and Chipotle cited great performance and continued potential, as does Costco. It may split its stock this year.

The Latin American e-commerce leader Similar to Amazon, MercadoLibre dominates Latin American e-commerce. Even though it's older, it works in a booming area and is growing its e-commerce company. GMV rose 79% year over year (currency neutral) in the 2023 fourth quarter.

Like Amazon, MercacoLibre has expanded into other businesses that are expanding faster. In the fourth quarter, its fintech company focused on digital payments had 153% growth in total payment volume (TPV). It has great potential in off-platform TPV, or payments made outside its marketplace. The fourth quarter saw 182% growth in off-platform TPV.

The fintech portion of MercadoLibre includes a new credit business. This successful project allows the corporation plenty of cash to fund other operations and invest for interest. The credit portfolio rose 33% year-over-year in Q4. Company revenue rose 83% year-over-year in the quarter. A tax bill in the fourth quarter hurt net income, but MercadoLibre remains profitable with $165 million.

Since going public in 2007, MercadoLibre has never split its stock. Its lifetime increase is over 5,000% and it trades at $1,540. For some time, MercadoLibre has been near four digits, which usually leads to a stock split. After the fourth-quarter report and profit dip, its stock is unchanged this year.

Unlike the other stock splits, a stock split might boost MercadoLibre stock interest and show management's optimism. In any case, investors should buy before MercadoLibre stock rises again.

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