MELI - Stock Split Watch: 2 Magnificent Growth Stocks to Buy Now and Hold Forever
2023-07-23 06:38:00 ET
Investors tend to get excited when a company splits its stock. That may seem irrational since stock splits have no direct impact on fundamentals like revenue or valuation, but there is a thread of logic in that reaction. Stock splits are only necessary after significant share price appreciation, which itself hints at a strong underlying business.
With that in mind, Costco Wholesale (NASDAQ: COST) and MercadoLibre (NASDAQ: MELI) are prime candidates for stock splits given that their shares currently trade at $555 and $1,223, respectively. But both stocks are worth buying even if that doesn't happen. Here's why.
Membership-based retailer Costco reported humdrum financial results in the most recent quarter as the broader retail industry continued to struggle with high inflation. Revenue rose just 2% to $53.6 billion, reflecting a 4.8% increase in store traffic offset by a 4.3% decrease in average ticket price, and earnings under generally accepted accounting principles ( GAAP) declined 4% to $2.93 per diluted share. However, growth should reaccelerate as the economy improves.
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Stock Split Watch: 2 Magnificent Growth Stocks to Buy Now and Hold Forever