Stocks That Split Double the Market’s Return. Bank of America Names Who’s Next

According to Bank of America, several companies are strong candidates for stock splits in the near future, a move that could potentially lead to their shares outperforming the broader market. Historical data suggests that stocks undergoing splits tend to generate returns that are double the market average.

‍

‍

Jared Woodard of Bank of America Securities highlighted that companies have been implementing stock splits at a pace not seen in over a decade. He also noted that more splits could be on the horizon, as about 14% of S&P 500 companies currently trade above $500 per share.

‍

While stock splits do not fundamentally alter a company’s value, they lower the share price—often by half—while increasing the total number of outstanding shares. This adjustment does not impact shareholder equity but can make shares more accessible to a broader range of investors.

‍

Woodard’s research indicates that stock splits are often a sign of strong future performance. Bank of America’s analysis suggests that, on average, stocks that undergo a split tend to deliver returns between 20% and 25% in the following 12 months. That significantly outperforms the average market return of about 12% over the same period.

‍

"Stock splits, in a way, are a victory for democratizing the market, as they allow more investors to participate in successful companies," Woodard told CNBC’s The Exchange on Tuesday. "Regardless of short-term fluctuations, history shows that stock splits signal strength for a company."

‍

Companies Likely to Split Their Stock

Bank of America identified potential stock split candidates based on two key factors:

• The stock trades above $500 per share.
• The company has delivered higher average returns over one- to five-year periods than stocks that previously underwent splits.

‍

Based on these criteria, here are some of the companies that could be next in line for a stock split:

‍

‍Netflix (NFLX)The streaming giant is a strong contender for a split, with shares closing at $994.87—well beyond BofA’s $500 threshold. Over the past year, Netflix stock has surged 77%, demonstrating strong momentum.The company continues to show fundamental strength, as evidenced by its latest quarterly earnings report, where it exceeded both revenue and earnings expectations. Netflix also reported reaching 300 million paid memberships and raised its full-year revenue outlook.Analyst price targets compiled by FactSet suggest that Netflix shares have about 8% upside potential from current levels.

‍

‍Meta Platforms (META)The parent company of Facebook has also been identified as a stock split candidate. Meta’s stock has climbed approximately 53% over the past year, closing at $700.49 on Tuesday.Meta recently reported strong fourth-quarter earnings, posting a 21% increase in year-over-year sales. Additionally, its AI-powered chatbot, MetaAI, has attracted more than 700 million monthly active users.Analysts polled by FactSet anticipate around 7% further upside for Meta’s stock.

‍

‍Eli Lilly (LLY)Another notable name on the list is Eli Lilly, the pharmaceutical giant behind Zepbound, a popular weight loss drug.While the company’s stock price was not specified, Eli Lilly’s impressive performance in recent years and its high share price position it as a potential candidate for a stock split.

‍

The Bigger PictureThe rising frequency of stock splits suggests that more companies could follow suit, especially as share prices climb to levels that may limit accessibility for smaller investors.Historically, stock splits have been seen as a bullish indicator, reflecting management’s confidence in the company’s future performance. While a split does not alter a company’s fundamentals, it often boosts liquidity and makes shares more appealing to a wider investor base.With major companies like Netflix, Meta, and Eli Lilly in strong financial positions, investors will be watching closely for any announcements of stock splits in the coming months.