Always keep an eye on stock splits.
After all, they make expensive, sought-after stocks far cheaper for retail investors who may have missed out on the prior run. In addition, according to Bank of America analysts, stock splits are typically bullish for companies that enact them. On average, returns one-year post-split is 25%, compared to around 12% for the broader market, as noted by Investing.com.
“Splits seem to be bullish across market regimes, something management teams might consider if shares look too expensive for buybacks,” they added.
In addition, stock splits are also a sign the company is bullish on its future, believing its stock will soar again post-split.
That being said, investors may want to take advantage of the upcoming stock split with Chipotle Mexican Grill (CMG), which will split 50 to 1 this week. Last trading just under $3,200, the split will bring its price down to a more reasonable price tag of $64 a share. While none of the stock’s fundamentals will change, it will make the stock far more attractive to more investors that aren’t going to pay $3,200 for a single share of CMG.
Post-split, we don’t expect for CMG to stay at $64 for long.
With strong growth ahead, CMG could easily rally back to $3,200 again down the road.