This article will discuss the 10 stocks that may be splitting soon.
Understanding Stock Splits
A stock split is when a company literally splits its stocks – it divides its existing shares into multiple new shares. This increases the number of shares outstanding without changing the company’s overall value while making the stock more affordable and accessible to smaller investors.
A company’s board of directors determines the ratio of a stock split. This can range from a common 2-for-1 split, and go as far as 100-for-1, or more. For instance, in a 2-for-1 split, each existing share is divided into two new shares. The price per share is reduced by half, but the total market capitalization remains unchanged. So, a stock split can increase liquidity and potentially attract more investors, by giving 2 shares valued at $50, instead of 1 at $100, and the company’s market cap is not impacted.
As the share price adjusts downward, dividends per share will also be adjusted to maintain the same total dividend payout. Similarly, all things tied to the share price are adjusted according to the split. However stock splits are non-dilutive, so existing shareholders’ voting rights remain unchanged.
Stock splits aren’t just beneficial to small investors trying to buy shares in big companies, they can also benefit companies by allowing them to repurchase shares at a lower price. But in one way or another, the eventual goal is to enhance a stock’s appeal to investors and make it more accessible to retail or individual investors.
At the end of the day, a stock split does not inherently create additional value for a company, a good company remains a good company after a stock split. Similarly, a bad company remains a bad company. A temporary reduction in share price followed by higher investor interest might cause the stock to surge in the short run, but no meaningful impact should be expected in the long run.
Experts Weight In on The Market Situation Right Now
We’ve seen a range of high-profile stock splits in 2024, especially in the semiconductor space. They seem to be the new cool thing to do for every company. However, these moves should be treated as no more than just making shares more accessible to smaller investors, and value investors should focus on fundamentals when they’re contemplating their next best idea.
The markets have been on a wild ride, all thanks to AI. The valuations have gotten out of hand, but we’ve also seen some corrections. Analysts are expecting earnings growth of 15% in 2025 along with rate cuts of up to 225 basis points. The Fed is expected to deliver its first cut in September after hiking interest rates constantly and holding them higher for longer. Jeff Krumpelman, the chief investment strategist at Mariner Wealth Advisors, and Julie Biel, the chief market strategist at Kayne Anderson Rudnick, recently appeared together on CNBC to discuss these dynamics and both had similar but contrasting opinions.
Krumpelman expressed optimism, citing strong fundamentals and improving economic indicators, particularly inflation. He believes we’re not in a recessionary scenario and sees potential for the S&P 500 to reach 6,000 by mid-2025, driven by solid earnings growth, healthy guidance, and projected GDP growth of 1.5% to 2.0%. Here’s what he said:
“We look at the individual stocks, we find a broadening market, and we find general health in terms of earnings growth and valuation. So, we’re optimistic and constructive.”
Biel, on the other hand, raised concerns about potential risks related to high valuations making stocks more fragile. She emphasized that the last time the market was this optimistic was back in 1984, just once in modern history. Biel remained cautiously optimistic and pointed to the $1 trillion in credit card debt and rising delinquency rates.
Most successful companies have a history of stock splits, but their share prices consistently return to levels where another split is warranted. Yet it is a widely practiced phenomenon and investors globally anticipate such moves from big companies to improve trust. In this context, we’re going to talk about the top 10 stocks that may be splitting soon.
Our Methodology
For this list, we first looked into internet rankings and online lists to find stocks trading above $900 that haven’t split for at least quite a while now. Then we considered business fundamentals and various financial metrics to identify potential candidates for the top 10 stocks that may be splitting soon. These companies are profitable businesses and most of them have some stock split history, if not all. These stocks are then listed in ascending order of the number of hedge fund holders.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Small Cap AI Stocks to Buy According to Short Sellers
10. WW Grainger Inc. (NYSE:GWW)
Share Price as of August 30: $968.04
Number of Hedge Fund Holders: 32
W.W. Grainger Inc. (NYSE:GWW) is an industrial supply company that deals with maintenance, repair, and operating (MRO) products, ranging from tools and fasteners to safety equipment and electrical components. The company has a strong online presence and physical branches worldwide, catering to various industries.
Recently, the company released its 2024 Environmental, Social, and Governance (ESG) Report. It reduced its global absolute Scope 1 & Scope 2 emissions by 31% since 2018, achieving its 2030 target of 30% reduction 7 years early. Now the updated 2030 target is a 50% reduction.
W.W. Grainger Inc. (NYSE:GWW) partnered with YouthBuild USA, aligning with its community strategy pillars to advance the emerging workforce and empower youth.
In Q2 of 2024, the company reported a sales increase of 3.1%. The High-Touch Solutions and Endless Assortment segments contributed to this aggregate sale with individual 3.1% and 3.3% rise respectively. The increase in sales resulted in 3.11% year-over-year revenue growth, with $4.31 billion in revenue, and $9.76 in earnings per share.
Due to temporary market dislocation, it might not meet the 2024 market share target. Yet, by June 30, 32 hedge funds were long in the company, with the highest stake at $74,434,800 by Citadel Investment Group.
In 1 year, the company saw a 33.47% increase in its stock price. While this might not say a lot about whether a company plans a stock split or not, given W.W. Grainger Inc.’s (NYSE:GWW) history of 3 stock splits in the late 1900s, the option does not seem unlikely.
The company adjusted its margin outlook for the remainder of 2024. It’s now focused on managing expenses and returns while growing SG&A slower than sales over time. The daily organic constant currency sales are expected to grow 4-6%. Such plans make it plausible for the company to go for a stock split.
ClearBridge Multi Cap Growth Strategy stated the following regarding W.W. Grainger, Inc. (NYSE:GWW) in its first quarter 2024 investor letter:
“W.W. Grainger, Inc. (NYSE:GWW), in the industrials sector, was our largest new buy. Grainger is the biggest industrial maintenance, repair, and operations distributor in North America. The company is a share gainer in a large and fragmented market, with less than 10% share of the addressable market for their direct, “high touch solutions” business estimated at more than $165 billion. Grainger has also barely scratched the surface with its online “endless assortment” platform, Zoro.com, which targets an even larger market. In addition to its growth and profit potential, we are attracted to Grainger’s strong balance sheet and improved capital allocation under its current management.”
9. Fair Isaac Corp. (NYSE:FICO)
Share Price as of August 30: $1,713.29
Number of Hedge Fund Holders: 42
Fair Isaac Corp. (NYSE:FICO) is a data analytics company focused on credit scoring services, which uses the FICO score, a measure of consumer credit risk widely used in the US to measure an individual’s creditworthiness. It also provides other solutions for financial services, healthcare, retail, and telecommunications.
In FQ3 2024, the company repurchased 196,000 shares of Fair Isaac Corp. (NYSE:FICO) at an average price of $1,293 per share and announced a new Board authorization for $1 billion of share repurchase.
Such actions have prompted the share price to surge 90.64% in just 1 year. One can anticipate a stock split following this surge, especially considering the company’s history of 4 stock splits in 1995, 2001, 2002, and 2004.
Overall, the company has been performing well. Management highlighted new features of the FICO Platform, which aims to enhance real-time decision-making for businesses. These features include improved data management, faster model optimization, enhanced credit risk modeling, and better decision simulation capabilities. Westpac NZ has successfully used the FICO Platform to meet evolving customer and regulatory requirements.
Fair Isaac Corp. (NYSE:FICO) reported strong FQ3 results with total revenue up 12.33% to $447.85 million. The earnings per share were $6.25 in this period. The Americas region contributed 85% of total revenue. The company’s scores segment saw the highest increase by 20%, driven by B2B growth, offset by B2C decline.
The company is held by 42 hedge funds. The largest stake is positioned at $1,306,668,338 by Valley Forge Capital.
Fair Isaac Corp.’s (NYSE:FICO) software business is thriving, driven by strong SaaS bookings and a successful FICO World event. The scores business continues to excel, offering valuable solutions, with a commitment to financial education, inclusion, and an aim to reach underserved communities.
Conestoga Capital Advisors stated the following regarding Fair Isaac Corporation (NYSE:FICO) in its Q2 2024 investor letter:
“Fair Isaac Corporation (NYSE:FICO): FICO is a leader in predictive analytics and decision management software and is also the provider of FICO credit scores. Fiscal 2Q24 results came in ahead of consensus’ expectations, with upside in revenue and margins due to special pricing in the Scores business. This also drove a healthy non-GAAP earnings per share (EPS) beat. While software revenue and bookings fell a bit short of expectations, platform growth continues at a solid pace and margins showed further signs of scaling higher. Importantly, FICO’s pricing power remains intact, and we believe this bodes well for future results.”
8. Autozone Inc. (NYSE:AZO)
Share Price as of August 30: $3,204.73
Number of Hedge Fund Holders: 45
Autozone Inc. (NYSE:AZO) is the largest US retailer of aftermarket automotive parts and accessories, with 7,140 stores across the Americas. It offers a wide range of products, including parts for cars, trucks, and SUVs, as well as tools and equipment, and has strong customer service and extensive in-store resources, focusing on both DIY customers and professional mechanics.
The company saw a good FQ3 2024, with total sales increasing by 3.5%, where same-store sales were up 1.9%. Commercial sales grew 3.3%, and the company opened 20 net new commercial programs and now has commercial in 92% of the total domestic stores.
Although the domestic sales were flat this quarter due to delayed tax refunds and mild/cooler weather, domestic commercial sales still accounted for 31% of the total domestic auto parts sales. There was a 1% decline in DIY sales.
Despite hindrances in performance, the company was able to generate $4.24 billion in revenue, recording a 3.54% year-over-year improvement. The earnings per share were $36.69.
Key factors driving commercial sales growth include improved inventory availability, enhanced hub and mega hub coverage, the Duralast brand’s focus on quality, and technology advancements. Recent customer service initiatives are also expected to boost market share.
Therefore, the company remains optimistic about its future growth. Investors also remain positive, as 45 hedge funds hold long positions in the company as of June 30. $355,914,308 is the largest stake held by Holocene Advisors.
Autozone Inc. (NYSE:AZO) has a sincere focus on customer service, which it now refers to as “WOW! Customer Service,” to drive sales growth. Insiders currently own 0.2% of the company. In the past year, the share price rose 25.03%. With 2 instances from 1992 and 1994, the company might plan on a stock split soon.
RGA Investment Advisors made the following comment about AutoZone, Inc. (NYSE:AZO) in its Q4 2022 investor letter:
“Below is a chart of Alphabet’s (NASDAQ:GOOG) P/E ratio plotted against AutoZone, Inc. (NYSE:AZO). Any number of examples between large cap tech companies and more mature companies could illustrate this very same point, but we find this specific case most interesting because of its history.
Note that in late 2014/early 2015 these multiples crossed one another. The relative harmony between Alphabet and Autozone lasted for just shy of a year at that time, before Alphabet’s shares surged and Autozone’s shares slumped. This relationship need not matter for markets, though we think there is some signal for investors. Autozone today trades at the highest multiples of its recent history, while Alphabet trades at its lowest. Meanwhile, despite growth estimates dropping considerably at Alphabet and appreciating modestly at Autozone, Alphabet will outgrow Autozone by a wide margin over the next five years…” (Click here to read the full text)
7. O’Reilly Automotive Inc. (NASDAQ:ORLY)
Share Price as of August 30: $1,138.47
Number of Hedge Fund Holders: 52
O’Reilly Automotive Inc. (NASDAQ:ORLY) is an automotive parts retailer that provides aftermarket parts, tools, supplies, equipment, and accessories to professional service providers and DIY customers. It’s known for its customer-focused approach and extensive product knowledge and has a team of over 91,000 hard-working professional parts people across North America.
The company has a history of 3 stock splits. Considering a high share price currently that resulted from a 19.54% rise in just 1 year, such an action can be expected from O’Reilly Automotive Inc. (NASDAQ:ORLY) again.
The second quarter began with sluggish sales in April and May due to cool/wet weather, reflected in industry-wide pressure. However, sales trends improved in June, driven by strong performance in hot weather-related categories. June represented the strongest performance for Q2, with similar results in July.
This brought a revenue of $4.27 billion, which was below street expectations but was still up by 4.99% from the previous year. The earnings per share were at $10.55. The company also repurchased 784,000 shares at an average price of $1,012, totaling $794 million.
Despite falling short of sales expectations, customer satisfaction resulted in a 2.3% comparable store sales increase, building upon the 9% growth achieved in the previous year. This is also why investor trust remains strong. As of June 30, 52 hedge funds held stakes in the company. Akre Capital Management had the biggest one at $1,009,676,789.
Performance at O’Reilly Automotive Inc. (NASDAQ:ORLY) is driven by increased ticket counts and excellent customer service. It opened 27 stores in Q2 and remains on track to open a total of 190-200 new stores in 2024.
Still, it lowered its full-year sales guidance due to economic uncertainty but remains confident in long-term demand for automotive aftermarket products. Its focus on customer service and market share gains will drive future growth.
Andvari Associates stated the following regarding O’Reilly Automotive, Inc. (NASDAQ:ORLY) in its Q2 2024 investor letter:
“O’Reilly Automotive, Inc. (NASDAQ:ORLY) is the third largest auto parts retailer in the country with over 6,095 stores in North America and Mexico. Their sales are split 60% to people who want to repair their own car and 40% to professionals who fix and maintain cars for a living. Following the common theme, O’Reilly sells essential products that people will buy regardless of the state of the economy.
We love that this business gushes cash—it had an extraordinary return on invested capital of 43.7% in 2023. O’Reilly has also had negative working capital since 2017, which means customers pay O’Reilly before O’Reilly needs to pay its suppliers. Looking at its capex, O’Reilly does have a higher capex ratio when compared to the others in the table. However, the ratio is still quite low considering O’Reilly is growing its store count in the range of 150-200 per year. At this rate, O’Reilly is expanding its store count by about 3% annually. Also driving the recent increase in capex has been a shift towards owning their stores rather than leasing them.”
6. Deckers Outdoor Corp. (NYSE:DECK)
Share Price as of August 30: $941.43
Number of Hedge Fund Holders: 52
Deckers Outdoor Corp. (NYSE:DECK) is a global footwear designer and distributor renowned for its iconic brands UGG Australia, Teva, and Sanuk. They offer a range of footwear for various activities, from casual wear to outdoor adventures, with a focus on comfort.
In the first quarter of 2025, the company recorded a 22.13% year-over-year improvement. This translated into a revenue of $825.35 million, which was $19.17 million higher than analyst estimates for the quarter. The earnings per share were $4.52.
HOKA footwear brand running shoes was the main growth driver, rising 30%. UGG also experienced growth, increasing 14%. Both D2C and wholesale channels saw increases of over 20%, demonstrating strong demand across the US and global marketplace, particularly in China and EMEA. International regions increased by 21% overall. These impressive results give the company confidence in its updated outlook for the fiscal full year 2025.
HOKA’s performance was driven by compelling product assortment, including new launches, and growth of continued designs. The brand is expanding its distribution through its global marketing campaign, FLY HUMAN FLY.
UGG revenue increased due to strong full-price selling of key iconic franchises. In addition to product development and marketing activations. The brand’s upcoming Feels Like UGG campaign will further enhance its consumer connections.
Both UGG and HOKA brands are well-positioned for continued growth in the future. The company also has other footwear brands like Teva, Sanuk, and Koolaburra, which have exhibited a combination of increases, declines, and flat sales. The brand’s focus on innovation and consumer-informed product development has contributed to its success
In just 1 year, this company saw a surge in its stock price by 81.44%. Given that it has used stock splits as a way to deal with stock price surges to improve investor interest, another stock split may happen for Deckers Outdoor Corp. (NYSE:DECK). So far, investors seem to trust this company, as it is held by 52 hedge funds. The largest stakeholder is Millennium Management, with a position of $226,316,390.
FPA Queens Road Small Cap Value Fund stated the following regarding Deckers Outdoor Corporation (NYSE:DECK) in its Q2 2024 investor letter:
“Deckers Outdoor Corporation (NYSE:DECK) is a footwear and apparel company that owns the UGG, Hoka, Teva, Sanuk, and Koolaburra brands. We think management has done a terrific job growing and extending the UGG franchise. Now they are replicating that success with Hoka running shoes, which surpassed $1 billion in sales in 2023. At over thirty times forward earnings (as of June 30, 2024), we have weighed Deckers’ valuation against the quality of its management team, strong brands, and net cash balance sheet and have trimmed our position. We first bought a small position in Deckers in 2015 and 2016 when the company was struggling with supply chain issues. Its stock price has increased more than ten times since then because of excellent operating performance, and we have trimmed all the way up. Given the company’s exceptional financial performance and growth, the stock trades on the higher side of our “range of reasonableness” and we have continued to trim accordingly.”
5. Costco Wholesale Corporation (NASDAQ:COST)
Share Price as of August 30: $886.63
Number of Hedge Fund Holders: 71
Costco Wholesale Corporation (NASDAQ:COST) is an American multinational corporation that operates a chain of membership-only big-box warehouse club retail stores, known for its bulk-sized products, low prices, and wide selection. It offers a variety of goods, including groceries, electronics, clothing, household items, and more.
The company intentionally creates value for members by delivering lower prices and reducing costs wherever possible. New Kirkland Signature items and price reductions on existing items further enhance value.
The company’s strong sales growth in FQ3 2024 was driven by merchandising teams identifying high-quality items that resonated with members. Members purchased more discretionary items and core merchandise, bakery sales also thrived with new items.
Since the end of FQ3, there was an opening in Loomis, California, and one in the seventh building in China in the Nanjing market. For the remainder of 2024, 9 openings in the US, 2 in Japan, and 1 in Korea are planned.
The company’s curated marketplace, Costco Next, is growing steadily, with 8 new vendors in FQ3, bringing the total to 75. App downloads increased by 32%, and site traffic increased by 16%. The average order value also rose 8%.
Net sales increased 9.1% for this quarter. Executive members now represent over 46% of paid members and 73.1% of worldwide sales. The year-over-year improvement was 9.07%, with a revenue of $58.52 billion and earnings per share of $3.78.
The company’s stock price also soared in a year with a 63.51% rise. Costco Wholesale Corporation (NASDAQ:COST) has engaged in 2 stock splits previously, and this rise in share price might just bring another one.
It expanded its partnership with Uber, allowing consumers to order from Costco through Uber Eats in Canada and 17 US. states. Management says this partnership will be expanded to more international countries soon. Such partnerships reflect optimism in the company’s future growth.
71 hedge funds hold long positions in the country as of June 30. The largest stake has a position of $2,512,487,521, held by Fisher Asset Management.
ClearBridge Sustainability Leaders Strategy stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its Q2 2024 investor letter:
“Consumer staples holdings were also standouts in the quarter, such as Costco Wholesale Corporation (NASDAQ:COST), which continues to execute well and delivered better than expected earnings, helped by strong traffic driving better expense leverage. Customers also looked to be shifting toward more discretionary purchases.”
4. MercadoLibre Inc. (NASDAQ:MELI)
Share Price as of August 30: $2,015.79
Number of Hedge Fund Holders: 84
MercadoLibre Inc. (NASDAQ:MELI) is a leading platform for buying, selling, and financial transactions, that operates online marketplaces. It provides a marketplace for sellers to offer products ranging from electronics and clothing to home goods and groceries. It also offers payment solutions, logistics services, and other tools to support both sellers and buyers.
84 hedge funds were long in this company as of June 30. Generation Investment Management has the largest stake in the company currently, with a value of $821,709,861.
In the second quarter of 2024, the company recorded a year-over-year growth surge of 48.55%. The revenue for Q2 was $5.07 billion, which surpassed analyst expectations by $389.51 million. The earnings per share were also high at $10.48, again beating street estimates by $2.14.
Commerce revenue made a 53.4% contribution to the total revenue. The company’s fintech services are also thriving, with monthly active users surpassing 50 million in Q2 2024, and a revenue increase of 27.5%. Remunerated accounts are gaining popularity, driving growth in assets under management. Consumer and merchant credit books are scaling profitably. It issued 1.6 million new credit cards.
MercadoLibre Inc.’s (NASDAQ:MELI) logistics network is driving e-commerce growth. It recently opened a fulfillment center in Texas to expand product offerings for Mexican consumers and complement its existing cross-border business from China, providing a great shipping service for its US-based assortment.
The logistics network is becoming more efficient. SLOW shipments allow the company to optimize processing time and shipping routes. MELI Delivery Day reduces last-mile costs by grouping deliveries at single addresses.
The company experienced a 50.08% surge in its share price in just 1 year. With such surges, companies often resort to stock splits. However, MercadoLibre Inc. (NASDAQ:MELI) has never split its stock. Despite this record, it can be anticipated that this time around the company might make a first-ever move in this direction, given its high share price.
Lakehouse Global Growth Fund stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its May 2024 investor letter:
“The Fund’s largest position, Buenos Aires based e-commerce leader MercadoLibre, Inc. (NASDAQ:MELI), reported a robust result that once again came in ahead of analyst expectations. Net revenue grew 30% year-on-year in U.S. dollar terms to US$4.0 billion while operating margins came in at 12.0%, providing a healthy balance of growth and profitability. Its marketplace business proved resilient, with strength in Brazil and Mexico more than enough to offset weakness in Argentina, which contacted by roughly a third due to weak macroeconomic conditions exacerbated by the 50%-plus devaluation of the Argentine Peso in December 2023. Whilst the economic situation in Argentia remains severe, we are comfortable with the risk as not only has management proved very adept at handling the challenges to date, but post the devaluation, the risk is meaningfully reduced as Argentina now only contributes 13% of the company’s total operating income. Overall, gross merchandise value still grew at 20% year-on-year to $11.4 billion and we continue to see significant opportunities ahead given the relatively nascent penetration of e-commerce in the region.”
3. TransDigm Group Inc. (NYSE:TDG)
Share Price as of August 30: $1,364.37
Number of Hedge Fund Holders: 86
TransDigm Group Inc. (NYSE:TDG) is an aerospace manufacturing company that develops and manufactures engineered aerospace components and subsystems. It specializes in engineered products critical for the safety and performance of commercial and military aircraft.
Despite ongoing OEM (Original Equipment Manufacturer) production challenges and production rates below pre-pandemic levels, revenue and bookings grew strongly in the recovering aerospace market.
In the commercial OEM sector, revenue rose about 23% in FQ3 compared to the previous year. While supply chain and labor challenges persist, the company estimated a monthly build rate of about 25 aircraft by the end of this quarter.
For the commercial aftermarket, revenue increased by approximately 11%. The passenger submarket grew 16% due to repair sales, the interior submarket grew 8%, and the business jet submarket saw a 10% increase, reversing previous declines. Conversely, the freight submarket declined 8% due to the return of belly capacity.
In the defense market, revenue grew about 13%, with both OEM and aftermarket components contributing.
These factors helped record total revenue of $2.05 billion this quarter, with an improvement of 17.32% year-over-year. The earnings per share remained at $9.00.
The company faced a surge in share price by 51.14% in 1 year. This increase indicates the need for a stock split, despite the company having no history of a stock split previously.
It is actively seeking M&A (merger and acquisition) opportunities and is confident in finding suitable targets despite market challenges. Its capital allocation prioritizes business reinvestment, accretive M&A, and shareholder returns, with less focus on debt paydown for now.
The company recently acquired Raptor Scientific, investing over $2.2 billion in the past 3 months. This acquisition is projected to add $125 million to fiscal full year 2024.
The company has recently acquired SEI and the CPI Electron Device Business, which are progressing well under Patrick Murphy’s leadership. Revenue guidance increased to approximately 20%. Overall, the company is satisfied with its fiscal third-quarter performance and expects continued growth as it maintains its operational strategy and services robust demand.
As of June 30, 86 hedge funds hold long positions in the company, with the highest stake at $1,398,855,189 by Matrix Capital Management.
ClearBridge Global Growth Strategy stated the following regarding TransDigm Group Incorporated (NYSE:TDG) in its first quarter 2024 investor letter:
“U.S. aircraft parts manufacturer TransDigm Group Incorporated (NYSE:TDG) was our largest addition. TransDigm is a steady compounder with strong pricing power coming from regulatory barriers that limit the number of competitors and due to its proprietary intellectual property, which makes it a sole supplier of many certified aircraft parts. We believe the company will see long-term duration of growth ahead as it benefits from the expansion of the aerospace aftermarket and acquisitions in this still-fragmented space.”
2. Booking Holdings Inc. (NASDAQ:BKNG)
Share Price as of August 30: $3,907.57
Number of Hedge Fund Holders: 96
Booking Holdings Inc. (NASDAQ:BKNG) is an American travel technology company that owns and operates several travel fare aggregators. It owns and operates several popular travel websites, including Booking.com, Priceline, Agoda, Kayak, and OpenTable, providing platforms for hotels, flights, rental cars, and vacation packages.
Booking.com saw slower room night growth in Q2 due to a smaller booking window expansion and moderating European travel growth. Still, travelers booked 287 million room nights across the company’s platforms, increasing 7.27% year-over-year improvement in revenue. The revenue recorded was $5.86 billion, with an earnings per share value of $41.90. Repeat travelers are growing quickly.
By the end of Q2, the alternative accommodation listings rose 11% from last year, boosting bookings. The Genius program boosts direct bookings, with nearly 30% of travelers in higher tiers and a 15% increase in benefits. Merchant bookings grew to 58% of total bookings in Q2, with connected transactions up 45%. Flight bookings increased 28% year-over-year.
The company remains optimistic for the remainder of 2024, focusing on strategic initiatives such as connected trips, expanded merchant offerings, AI development, and loyalty program enhancements, while prioritizing cost efficiencies. For the full year, management expects gross bookings growth to exceed 6%, slightly below previous forecasts due to lower flight prices. Revenue growth is projected over 7%, slightly higher than before.
In 1 year, the company’s share price also rose 24.70%. Most companies might not go towards a stock split on such an increase, but since Booking Holdings Inc. (NASDAQ:BKNG) has already observed a stock split once in 2003, the company might resort to it again considering its high share price. 96 hedge funds are long on it. The biggest stake is valued at $1,605,652,190, held by Fisher Asset Management, as of June 30.
Wedgewood Partners stated the following regarding Booking Holdings Inc. (NASDAQ:BKNG) in its Q2 2024 investor letter:
“Booking Holdings Inc. (NASDAQ:BKNG) contributed to performance as travel spending across the U.S. and Europe remains quite healthy, whereas the Company took share in alternative accommodations, and looks set to expand margins after a few years of reinvestment. The Company has also been aggressively reducing its share count at reasonably attractive valuation multiples. Booking should be able to compound earnings at an attractive, double-digit rate for the next few years given these various initiatives.”
1. Eli Lilly And Co. (NYSE:LLY)
Share Price as of August 30: $940.20
Number of Hedge Fund Holders: 100
Eli Lilly And Co. (NYSE:LLY) is an American pharmaceutical company with offices in 18 countries, known for developing and manufacturing a range of prescription drugs for various medical conditions. Some of its products include insulin, antidepressants, and treatments for cancer, diabetes, and autoimmune diseases, sold in over 125 countries.
The company has a very strong position among investors, with 100 hedge funds holding long positions as of June 30. The highest stake has a value of $4,426,141,743 and is held by Fisher Asset Management.
The company has a history of stock splits with 4 2-for-1 splits implemented in the late 1900s. Considering that its share price soared by 71.57% in one year, it might just be time for another stock split.
Eli Lilly And Co. (NYSE:LLY) is focused on manufacturing expansion and is increasing global access to Lilly medicines. In Q2, revenue grew 35.98%, with a total value of $11.30 billion, and new products generating nearly $3.5 billion. The earnings per share were $3.92.
US demand for Mounjaro and Zepbound remains strong, and despite early-year prescription volatility, supply improvements are promising. Non-incretin growth was 17% globally and 25% in the US. Lilly is adding 11 new obesity treatments and investing $5.3 billion in Indiana manufacturing.
Since 2020, the company has invested over $18 billion in US and European facilities, and now production is ramping up, including at Concur North Carolina, which starts in late 2024.
Recent milestones include Kisunla’s Alzheimer’s approval, Jaypirca’s Japan approval, tirzepatide’s submissions for sleep apnea, and positive Phase 3 results in heart failure and obesity.
In July, it agreed to acquire Morphic, which develops oral therapies for chronic diseases. At the same time, management announced that Zepbound’s new doses were coming.
Its strong financial performance, innovative drug pipeline, and strategic investments position it as a leading player in the healthcare market. Revenue guidance is up $3 billion for the full year 2024.
Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter:
“Shares of global pharmaceutical company Eli Lilly and Company (NYSE:LLY) increased on continued investor enthusiasm around GLP-1 drugs for diabetes and obesity. We remain shareholders. Lilly’s Mounjaro/Zepbound not only offers superb blood sugar control for diabetics but can drive 20%-plus weight loss and likely improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. Lilly is developing next generation drugs, including retatrutide, which drives approximately 25% weight loss, and orforglipron, a daily pill that produces approximately 15% weight loss. In the U.S. alone, there are 32 million Type 2 diabetics and an additional 105 million obese patients who we estimate would qualify for GLP-1 drugs. Although supply and access are limited near term, we think GLP-1 drugs will become standard of care for both diabetes and obesity and will become a $150 billion-plus category. We see Lilly setting a high efficacy bar and capturing significant long-term market share. We think the adoption of GLP-1s will drive Lilly to triple total revenue by 2030.”
While we acknowledge the growth potential of LLY, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the ones mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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