Buy these Stocks for Mass Purchase in March and One to Steer Clear From
Bulls on Wall Street: The Unstoppable Run of Stocks, AI, and Stock Splits
You might've missed it, but Wall Street bulls have been raging for over 2.5 years. Since the bottoming out of the Dow Jones, S&P 500, and Nasdaq in October 2022, these major indexes have soared to dozens of all-time highs.
Among the driver's seat, the evolution of artificial intelligence (AI) and Donald Trump's return to the White House have kept investors on their toes. But don't forget the roaring impact of stock-split euphoria on lifting the values of high-profile stocks.
Stock Splits: Not Just Math, But Money
A stock split is a cosmetic event that alters a company's share price and outstanding share count by the same magnitude. Although it doesn't change a company's market cap or affect its operational performance, it's often capital to everyday investors. These cosmetic changes can be forward splits (which reduce share prices) or reverse splits (which increase share prices).
The Forward vs. Reverse Split Showdown
Companies opting for forward splits are usually outpacing their competition in terms of innovation and execution. On the other hand, struggling companies implementing reverse splits are attempting to fend off delisting from significant stock exchanges. In 2024, more than a dozen businesses undertook a stock split—only one was a reverse split.
Sirius XM Holdings: The Votes Are In
The only major company that completed a reverse split in 2024 was satellite-radio operator Sirius XM Holdings. This reverse split aim was to get Sirius XM back in the good books of institutional money managers. After a 1-for-10 reverse split in September, the company's shares are now safer and more transparent. Although it's faced declining sales and a slight fall in its subscriber count, Sirius XM boasts a legal monopoly, predictable expenses, and a respectable 76% revenue from subscriptions. Armed with this competitive advantage, Sirius XM is a no-brainer buy in March.
Supermicro: A Stock-Split Stock to Avoid
Not every stock-split stock is a winner. The customizable rack server and storage solutions specialist Super Micro Computer, also known as Supermicro, completed a 10-for-1 forward split in September. Despite a 110% revenue surge in fiscal 2024 and a projected 62% year-over-year revenue growth in the current fiscal year, concerns about Supermicro's financial accounting, reliance on Nvidia's supply chain, and vulnerability to the bursting of the AI bubble make it a stock-split stock to shy away from in March.
- In 2025, investors may find themselves amidst a wave of euphoria, as more companies pile into forward splits, a cosmetic event often seen as an indicator of outperforming competition in the realm of innovation and execution.
- The customizable rack server and storage solutions specialist, Super Micro Computer, underwent a 10-for-1 forward split in September of the same year, but it's financial accounting concerns, vulnerability to the AI bubble burst, and reliance on Nvidia's supply chain make Supermicro a stock-split stock to avoid in 2025.
- Despite the roaring impact of stock-split euphoria on lifting the values of high-profile stocks, it's essential to approach each potential investment carefully, understanding the underlying financial health and strategic positioning of the company involved.
- By investings wisely in stocks that demonstrate solid financials, innovative strategies, and attractive growth prospects, individuals can bolster their financial portfolios and be part of the unstoppable run of stocks on Wall Street leading up to the year 2025 and beyond.
