We recently published a list of 12 Stocks That Could Split in the Near Future. In this article, we are going to take a look at where W.W. Grainger Inc. (NYSE:GWW) stands against other stocks that could split in the near future.
Stock splits don’t change how much a company is worth, but they make each share cheaper and easier for people to buy, considering it’s a forward split. Stock splits can vary from a simple 2-for-1 split to a larger 100-for-1 split or more. In a 2-for-1 split, each share is turned into two new shares. This makes each share half the price, but the total value of the company remains the same. For example, if a share costs $100, after a 2-for-1 split, you’ll have two shares that cost $50 each. This can make it easier to buy shares and attract more people to invest. Even though the share price goes down, the total amount of money paid out to shareholders stays the same. Hence, splitting shares doesn’t change how much control existing shareholders have in the company. The main goal is to make the company’s stock more appealing to investors. There’s no proof that stock splits make a company better, but they can make investors feel more positive about the company. But with these benefits come the costs and risks. The process requires legal work and can be expensive.
Splitting a stock doesn’t change a good company into a bad one or vice versa. The price might go up a bit after the split, but it won’t change the company’s long-term fundamentals. Sometimes, a low stock price can actually look bad for a big company. Still, many companies practice splitting stocks if their share prices are growing too high.
2025 Outlook
On January 16, Mark Newton, Fundstrat Global head of technical strategy, joined ‘Squawk Box’ on CNBC to discuss that the long-term market trends look positive. The market initially experienced a cooler-than-expected jump, but concerns were raised about the breadth of the market and the potential impact of interest rates on small-cap stocks. Mark Newton expressed a constructive view but noted that the market’s breadth had deteriorated significantly, with only about 25% of stocks currently above their 50-day moving average. This decline was particularly evident in sectors like healthcare, where seven sectors lost more than 4% in the last month.
Despite these challenges, Newton highlighted that technology stocks had rebounded, helping to keep indices afloat and maintaining long-term trends. However, he noted that near-term sentiment had become pessimistic regarding the potential policies of the president-elect, which added to market uncertainty. He maintained his target for the S&P 500 at 6650, suggesting that interest rates might begin to roll over in the coming months, which could be bullish for equities given their recent correlation with treasury yields.
Methodology
We sifted through ETFs, online rankings, and internet lists to compile a list of the top stocks trading over $400 as of January 19. We then selected the 20 stocks with high surges in their share prices in the past 5 years and a history of splitting stocks. 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 Q3 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A portrait of an industrial worker wearing safety equipment, smiling while inspecting a piece of equipment.
W.W. Grainger Inc. (NYSE:GWW)
Share Price as of January 19: $1,113.60
Surge in Share Price in 5 Years: 227.38%
Stock Split Confirmed: No
Number of Hedge Fund Holders: 34
W.W. Grainger Inc. (NYSE:GWW) is a broad-line distributor of industrial supplies and maintenance products. These include MRO (maintenance, repair, and operations) supplies, tools, safety equipment, and facility maintenance items. With a large network of branches and online platforms, it caters to the diverse needs of businesses across several industries.
The company’s third-quarter growth in 2024 was driven by its data-driven initiatives. It implemented analytical tools that provide sales teams with valuable insights into customer needs. This leads to more effective interactions and driving sales growth. For instance, sales in the High-Touch Solutions segment grew by 3.3% year-over-year in Q3, due to the solid volume growth and improved price contribution. This segment includes core B2B customers.
W.W. Grainger Inc. (NYSE:GWW) is testing a GenAI model in its call centers, which aims to improve customer service efficiency by providing agents with quick and relevant responses to customer inquiries. This technology is expected to enhance customer satisfaction and drive operational efficiency.
ClearBridge Multi Cap Growth Strategy likes W.W. Grainger Inc. (NYSE:GWW) for its leadership in MRO, and share gain potential in a large market. It stated the following regarding the company 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.”
Overall, GWW ranks 11th on our list of stocks that could split in the near future. While we acknowledge the growth potential of GWW, 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 GWW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
