We recently published a list of the 12 Stocks to Buy That May Be Splitting Soon. In this article, we are going to take a look at where Autozone, Inc. (NYSE:AZO) stands against other stocks that may be splitting soon.
Stock splits change the number of outstanding shares of a company, but not the company’s overall value. A forward split makes each share cheaper and easier to buy. Splits can range from 2-for-1 to 100-for-1 or more. In a 2-for-1 split, one share becomes two by cutting the price in half. For instance, a $100 share becomes two $50 shares. This makes shares more affordable and attracts more investors. Even though the price per share drops, the total value held by shareholders stays the same. So, splits don’t change who controls the company. The main reason for a split is to make the stock more appealing, or accessible for retail investors.
Uncertainty is Driving Selloff
Dan Suzuki, Deputy CIO at Bernstein Advisors, joined CNBC’s ‘Squawk on the Street’ on March 14 to share his perspective on the recent persistent three-week downtrend in the indexes during an interview. He explained that the sell-off is largely driven by uncertainty and its negative impact on sentiment. According to Suzuki, analyzing market movements reveals that the stocks that rallied most after the election until mid-February have seen significant declines since then and create a mirror image effect. Additionally, the most expensive and high-beta stocks have been hit hardest as the market prices are in an uncertainty risk premium. These dynamics are central to what is driving markets currently. Despite this, Suzuki noted that hard economic data remains strong and suggests that relief from headline uncertainties could reduce the risk premium.
Suzuki noted concerns over soft retail sales and spending figures, which might be due to weather or seasonal factors. However, he highlighted resilience in weekly retail sales and strong leading indicators. Prolonged uncertainty could still impact growth. Suzuki linked consumer trends to disappointing corporate guidance and persistently high inflation, which affected sentiment. He also pointed out the wealth effect caused by a stock market decline of 10% or more, particularly for investors in crowded names. Markets are adjusting to persistent uncertainty, which will continue even with relief anticipated within the next month or two, which will prevent a return to the high multiples seen in 2020-2023.
In an uncertain market with heightened risk premiums, companies considering stock splits may need to weigh the potential benefits against the backdrop of overall market sentiment. The ongoing economic uncertainty and changes in consumer behavior might impact how companies approach decisions about stock splits, especially if they are concerned about maintaining investor confidence in a volatile market.
Methodology
We sifted through ETFs, online rankings, and internet lists to compile a list of the top stocks that were trading over $400 as of March 17. We then selected the 20 stocks with high surges in their share prices in the past 5 years and a history of stock splits. From that, we picked the top 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician in a mechanic’s uniform replacing an A/C compressor, signifying the company’s automotive replacement parts business.
Autozone, Inc. (NYSE:AZO)
Share Price as of March 17: $3,554.91
Surge in Share Price in 5 Years: 388.22%
Stock Split Confirmed: No
Number of Hedge Fund Holders: 56
Autozone, Inc. (NYSE:AZO) retails and distributes automotive replacement parts and accessories across the US, Mexico, and Brazil. It offers a range of products for vehicles, from essential maintenance items to hard parts and accessories. It caters to both DIY customers and professional mechanics through various sales channels. These include online platforms and commercial programs.
The company’s Domestic Commercial business had its sales up 7.3% year-over-year in FQ2 2025. This segment now represents 31% of domestic auto parts sales and 27% of total company sales. Each of the company’s commercial sales programs brought in an average of $14,700 in sales every week, which is a 4.3% improvement.
To fuel this growth, Autozone, Inc. (NYSE:AZO) is expanding its Mega-Hub network. The company ended FQ2 with 111 Mega-Hubs and plans to add at least 19 more in the next two quarters. The company’s Mega-Hub network consists of large stores carrying over 100,000 SKUs which are designed to boost commercial sales and serve as expanded assortment sources for other stores. The company is focused on increasing its market share by attracting new commercial customers and selling more to existing ones.
The company’s leadership in the growing automotive parts market, strong customer service, and disciplined capital allocation position it for continued success. Brown Advisors Global Leaders Strategy stated the following regarding AutoZone, Inc. (NYSE:AZO) in its Q4 2024 investor letter:
“AutoZone, Inc. (NYSE:AZO) is the leading replacement automotive parts retailer and distributor in the US, servicing both the Do-it-Yourself (DIY) and Do-it-for-Me (DIFM) segments of the used car market, a market that is structurally growing as the fleet expands, with a high degree of visibility into future demand of the 6+ year used car cohort, which is AutoZone’s core target market. AutoZone is expanding into the faster growing DIFM market, as well as into Brazil and Mexico. The company’s superior customer outcome is immediate parts availability and the meaningful de-risking of the balance sheets of smaller garages which do not need to hold inventory themselves. It offers a differentiated service for customers based on local availability of parts (“in stock, in market”), quick turnaround speed and advice (including free specialty tool loans so DIY customers can complete necessary maintenance at lower cost but generating enduring loyalty). All this has historically proven difficult to replicate in an e-commerce setting. While there are a small number of large companies operating in this growing market, further consolidation of smaller competitors is expected as leading retailers’ scale (depth and breadth of inventory) and network effects (proximity to customers in immediate need of repair) constitute strong moats. One of the impressive characteristics of the company’s capital allocation is that it has delivered exceptional capital discipline and deployed its cash flow into share buybacks which has reduced the company’s share count by about 85% since 2000.”
Overall, AZO ranks 10th on our list of the stocks that may be splitting soon. While we acknowledge the growth potential of AZO as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AZO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
