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Buy These Stock Splits as Analysts See Upside

The market has witnessed several stocks-splits this year. Analysts see upside in Fortinet (FTNT), Alphabet (GOOGL), and Nintendo (NTDOY), which have either undergone a stock split or will do so in the near term. The availability of these stocks at affordable prices after their splits could be an excellent opportunity to invest in them. Continue reading…

Many companies have undergone stock splits this year. Stock splits are usually undertaken when the share price has reached very high levels. The bull run last year led to a massive spike in the stock prices of many companies.

Stock splits occur when a company decides to increase the number of its shares to boost the stock’s liquidity and make it affordable for investors. A stock split does not change the company’s market value. However, post a stock split, the price often rises as many investors consider this action as conveying the company’s unrealized value and growth prospects.

Stocks Fortinet, Inc. (FTNT), Alphabet Inc. (GOOGL), and Nintendo Co., Ltd. (NTDOY) have already undergone or are about to undergo a stock split. Analysts expect these stocks to rally in the upcoming months, given their fundamental strength. Therefore, it could be wise to add these stocks to your watchlist.

Fortinet, Inc. (FTNT)

FTNT offers cybersecurity and networking solutions. The company provides cyber security solutions to various organizations, including enterprises, communication service providers, government organizations, and small businesses.

Its FortiOS network operating system manages its network security appliances. Its cloud security portfolio also includes securing applications, including email and web. Its cloud security offerings are available for deployment in public and private cloud environments.

FTNT had undergone a five-for-one stock split on June 22, 2022. The stock started trading on a split-adjusted basis on June 23, 2022.

On April 4, 2022, FTNT announced the release of FortiOS 7.2, the latest upgrade to its flagship operating system and the foundation of the Fortinet Security Fabric. The enhancements to FortiOS enable organizations to dodge the threat landscape while helping achieve digital acceleration.

FTNT’s revenue increased 34.4% year-over-year to $954.80 million for the first quarter ended March 31, 2022. The company’s non-GAAP net income increased 14.3% year-over-year to $155.10 million. Also, its non-GAAP EPS came in at $0.94, representing an increase of 16% year-over-year.

Analysts expect FTNT’s EPS and revenue for the quarter ending September 30, 2022, to increase 35% and 38.7% year-over-year to $0.27 and $1.13 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters.

Over the past year, the stock has gained 21.5% to close the last trading session at $58.85. Wall Street analysts expect the stock to hit $71.32 in the upcoming months, indicating a potential upside of 21.2%.

Alphabet Inc. (GOOGL)

GOOGL is the holding company behind Google and other bets. The Google segments include Google Services and Google Cloud. Its products and platforms include Android, Chrome, Gmail, Google Drive, Google Maps, Search, and Youtube.

GOOGL has announced a 20-for-1 stock split, which will take effect on July 15.

On March 8, 2022, GOOGL announced that it had signed a definitive agreement to acquire Mandiant, Inc. The acquisition is expected to bolster Google Cloud’s security strength.

For the fiscal first quarter ended March 31, 2022, GOOGL’s revenues increased 23% year-over-year to $68.01 billion. The company’s operating income increased 22.2% year-over-year to $20.09 billion. Also, its Total Acquisition Cost (TAC) increased 23.4% year-over-year.

For fiscal 2023, GOOGL’s EPS and revenue are expected to increase 18.6% and 15.1% year-over-year to $131.62 and $342.35 billion, respectively. It surpassed consensus EPS estimates in three of the trailing four quarters.

Over the past month, the stock has gained 3.1% to close the last trading session at $2,316.67. Wall Street analysts expect the stock to hit $3,138.17 in the upcoming months, indicating a potential upside of 35.4%.

Nintendo Co., Ltd. (NTDOY)

NTDOY is mainly engaged in developing, manufacturing, and selling entertainment products in the home entertainment field. The company’s main products include game machines such as portable and console game machines and software, as well as trump and Carta.

On May 10, 2022, NTDOY announced a 10-1 stock split, which will become effective on October 1, 2022.

NTDOY’s total current assets increased 5.2% year-over-year to ¥2,126.21 billion ($15.73 billion) for the fiscal year ended March 31, 2022. The company’s total assets increased 8.8% year-over-year to ¥2,662.38 billion ($19.69 billion). Also, its non-operating income increased 98.3% year-over-year to ¥78.78 billion ($582.83 million).

Analysts expect NTDOY’s revenue for fiscal 2023 to increase 15.9% year-over-year to $12.78 billion. Over the past year, the stock has lost 25.5% to close the last trading session at $53.87. However, Wall Street analysts expect the stock to hit $72.67 in the upcoming months, indicating a potential upside of 34.9%.

FTNT shares rose $1.70 (+2.89%) in premarket trading Tuesday. Year-to-date, FTNT has declined -18.13%, versus a -17.58% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.


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