Three Best Tech Stocks That Could Split in 2017
Technology stocks are on a tear in 2017. Naturally, investors are scrambling to get their hands on the best ones. But I’d understand if you’re part of a certain segment of the investor community that’s feeling left out. For some of you, the dream of owning some of the best tech stocks in 2017 will only reach fruition if they split. I’ve filtered out three very likely technology stock splits 2017 that could deliver us three great investment opportunities in the tech sector this year. So, watch out for these stocks!
No, my three predictions are not GOOG, AMZN, and TSLA. I know those three are the hottest tech tickers and secretly we all wish they split this year. It’s obvious that these stocks are too expensive for retail investors to buy, unless you have hundreds of thousands of dollar to invest. I hate to say this, but these stocks are out of reach for investors with modestly sized portfolios.
But worry not! Look beyond Google and Alphabet Inc (NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), and Tesla Inc (NASDAQ:TSLA), and you’ll find a treasure trove of great technology stocks waiting to be unearthed.
I’m here to help investors shovel them out. But I admit that a stock split could become the metaphoric wheelbarrow that will help carry them away with ease.
You see, stock splits are a good way for companies to add value to their stock. Wait, are you confused? Does that statement contradict what you were taught in Finance 101? Of course!
Like all other disciplines, finance has its limitations. There is a great divide between theory and practice. Stock splits are one good example.
On paper, it says that stock splits do not change anything for a company’s market value. All they do is add liquidity to a stock. And yet, studies have shown that stocks that are split tend to outperform peers at least in the first year of splitting.
So, if stock prices are going up, and so are returns for stockholders, then shouldn’t we call it value generation? Well, it’s a paradox we can leave for the finance geeks to solve.
Meanwhile, let me give you a quick refresher on stock splits, if all this commentary just went over your head.
A stock split slices down the stock into smaller parts such that it becomes cheaper for retail investors to buy. For instance, in a 2-for-1 split, the company will take away your stock and in turn give you twice as many shares. But the price will go down by inverse of the same proportion. So it’ll now be priced half of what it was prior to the split.
In other words, say, you have 100 shares of a company’s stock priced at $50.00 each. After a 2-for-1 split, you’ll be holding 200 shares priced at $25.00 each. Regardless, your stake in the company remains the same; that is, $5000.
But now that there is a higher number of cheap stock out there, they can be bought and sold with greater ease. You may already know that anything that can exchange hands with ease is termed “liquid.”
It’s natural that liquidity and affordability jointly attract more buyers—buyers who could previously not afford the stock. As a result, the high demand of buyers translates into higher prices.
Long story short; the price of the split stock goes up after the split. As easy as pie!
Technology Stock Splits 2017 That Offer Great Investment Opportunity
So cutting straight to the chase, here are the three best tech stocks that could split in 2017. If you don’t want to miss out on a bargain-priced opportunity, then now may be the best time to add them to your watch list.
1. Intuitive Surgical (ISRG) Stock
Unlike most hot tech stocks, this company doesn’t have its stock price hinging solely on faddish exuberance about its future growth. This is one rare tech stock whose fundamentals actually back its valuation.
Intuitive Surgical, Inc. (NASDAQ:ISRG) is not only profitable, its bottom line is fattening over time. It has an absolutely clean balance sheet with no debt burden and over a billion dollars lying in cash reserves.
In case you’re unaware, the company manufactures surgical instruments, but is popularly known for its robotic arms that it has very cleverly named the “da Vinci surgical system.”
The robotic arms imitate the hand movements of a surgeon and carry out surgeries with precision. The cutting edge technology is seeing steady demand in the medical community, and thus brings in truckloads of money for the company.
It is this daring bet on a next-generation technology that has driven the market to value Intuitive Surgical stock above an astounding $800.00 apiece! Bear in mind that only a handful of technology stocks like Google and Amazon boast stock prices in excess of $800.00.
But sadly, the expensive stock has kept retail investors at bay. Also worth noting is the fact that only a small number of its stock is afloat. This is why its market cap hovers in the mid-cap range. The two factors have jointly made the stock relatively illiquid. But a stock split in 2017 could certainly change that.
If you search for ISRG stock split history, it will turn up blank. It’s interesting that the company has never split its stock in the past. That, coupled with the fact that its price is very expensive, could push the management to go for the first ever ISRG stock split in 2017.
Nonetheless, the stock is worth a second look. It has returned roughly 130% in gains in the past three years alone and is maintaining its uptrend. You might want to start tracking it now.
Chart courtesy of StockCharts.com
2. Amgen (AMGN) Stock
A list of valuable tech stocks could never be complete without a biotechnology company landing a spot on it. And what better biotech stock is there than AMGN stock?
Amgen, Inc. (NASDAQ:AMGN) is one of the largest biotechnology companies in the world, busy discovering, manufacturing, and selling some of the most popular and successful drugs.
Like Intuitive Surgical, Amgen also boasts great fundamentals. Naturally, the market couldn’t have missed that. Both its revenue and earnings streams are healthy and growing, margins are some of the highest in the industry and more than enough cash is lying around in its bank accounts to pay off all of its debt and still be left with some. What’s more; AMGN stock also pays a dividend.
But the cherry on top is all the latest announcements of Amgen’s successful drug trials and drug approvals, both within and outside the U.S., that have pushed the stock near all-time highs.
Now, at around $160.00, you may feel that the stock is not as costly as, say, Intuitive Surgical, for the management to consider a split. But you’ll be severely wrong.
If you look at AMGN stock split history, you’ll discover that this is the very price the company has formerly split its stock on. In fact, Amgen management has gone for four splits at much lower prices than today’s. From what I see, Amgen likes to keep the stock trading under $100.00, which bodes well for retail investors.
|Stock Split Date||Stock Split Ratio||Pre- & Post-Split Prices|
|August 1990||2-for-1||$88.00 to $44.00|
|September 1991||3-for-1||$160.37 to $53.46|
|August 1995||2-for-1||$94.12 to $47.06|
|March 1999||2-for-1||$128.5 to $64.25|
|November 1999||2-for-1||$94.69 to $47.34|
So, the fact that it’s trading over $150.00 now makes AMGN stock a very likely candidate for a technology stock split 2017.
Regardless, I say, every penny invested in the company could be well worth it because this is one of the best biotech stocks out there. So keep your eyes open for a window of opportunity in 2017—the best opportunity being an AMGN stock split.
3. Facebook (FB) Stock
Facebook Inc (NASDAQ:FB) is ostensibly the biggest success story of the 21st century. Naturally, it doesn’t beg an introduction.
In just five years of going public, the company has grown into a technology juggernaut with initiatives in nearly all next-generation technologies you can think of. On the list are artificial intelligence, virtual reality, augmented reality, drones, and deep machine learning. And this is only the tip of a gigantic iceberg in the making.
The best part is that this is one of the few technology stocks that are ridiculously profitable and growing at a hare’s pace. Facebook makes more money than all of its peers combined. The stock is likewise a great growth play.
To give you an idea; let’s say you had bought FB stock around its initial public offering. You would have nearly quadrupled your investment by now!
Chart courtesy of StockCharts.com
But the sad part is that those of us who missed the boat earlier are now finding it hard to get in. The stock is hovering over the $150.00 mark and buying just 100 shares of FB stock would mean forking out a solid $15,000 from an investor’s portfolios. This is why a stock split could prove a game-changer.
Let me remind you that the company split its stock thrice between 2006 and 2010. This was before its IPO. Take note that since going public in 2012, Facebook has never split its stock. So what are the chances of it happening now, you ask? Very high! I say this for a reason.
That’s because Facebook’s shareholders have already approved a 3-for-1 split in 2016. It’s been a year that they’ve been waiting for the management to pull the trigger on it. This year could very well be the year the first FB stock split could happen. So keep your ears pricked up and eyes open!
Final Word on Technology Stock Splits 2017
It’s true that a stock split would open the floodgates for new investors looking for an affordable price point on these stocks. Yet, all three of these technology stocks make for promising investments for the future, whether they are split or not.
Investors should definitely keep an eye on all three ahead of these very likely tech stock splits in 2017.