CMG & COST Are About to Split Their Stocks!
Although stock splits don't change a company's fundamental value, they do make investing more accessible by increasing the number of shares and lowering the price, thus expanding the investor base and potentially boosting the stock price.
Here are two non-tech, household-name stocks that are about to get their own stock splits.
1. $Chipotle Mexican Grill(CMG)$
On March 19th, CMG proposed a 50-for-1 stock split, and shareholders will vote on this proposal at the annual shareholders' meeting on Thursday.
The approval of the stock split is highly likely. First, it's rare for a stock split to be rejected. Second, Chipotle's stock price has reached a whopping $3,090, and this will be the company′ s first stock split in history. If the split is successful, Chipotle ′ s stock price will drop to around $62 on June 26th, making it easily accessible for investors with a limited budget.
When it comes to the company's fundamentals, in an era where franchising is prevalent in the restaurant industry, Chipotle still insists on self-operation, thus maintaining control over product quality and employee relations.
Simply put, Chipotle has set a new standard in the restaurant industry and is a quality company. The stock split shows that the management team is confident in the future growth potential of the stock price.
2. $Costco(COST)$
COST, a wholesale retailer, is no stranger to stock splits. Its last 2-for-1 stock split occurred on January 13th, 2000, and since then, the stock has delivered a total return of 2,450%, while $S&P 500(.SPX)$ has only risen 477%.
Costco's Kirkland Signature private-label products are on par with many leading brand products. In fact, they are likely produced by the same manufacturers and factories but at lower prices. Costco's business model is also a major highlight. Its retail operations operate close to the cost line, but the profit margin is still significant due to its membership system.
Although Costco has not yet announced a stock split or scheduled a shareholder vote, the timing is ripe for a split since the stock price broke through $800 last week.
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