Looking ahead to 2024, historical market trends are brewing an optimistic forecast for the Nasdaq Composite. A meticulous analysis dating back to 1971 reveals a noteworthy average yearly surge of 19% following a recovery year, as was the case in 2023. For prospective investors, the allure of stock-split stocks holds potential to capitalize on this promising trajectory. Stock splits, a strategic corporate move to increase share liquidity, convey a bullish indication of a company’s upward momentum. Join the quest to dissect two recent stock-split stocks – Nvidia (NASDAQ: NVDA) and Monster Beverage (NASDAQ: MNST), and unearth their investment merit in the upcoming year.
Nvidia’s Fortunes
Charting its course through a colossal 2022 crash, Nvidia’s stock has been on a commendable upward trajectory in the past decade. To rein in share prices, the management engineered five stock splits, the latest being a 4-for-1 conversion in July 2021. Despite the surge since then, the window for investors to enter the fray remains open. Historical success hinges on Nvidia’s adeptness in leveraging emerging technologies ahead of competitors. From its pioneering graphics processing units (GPUs)‘ gaming origins to a foray into cryptocurrency mining and now, the vanguard of generative artificial intelligence (AI), Nvidia’s journey into AI hardware sales has propelled revenues meteorically with a 206% surge to $18.1 billion in the third quarter. The projected meteoric rise of the AI training hardware market from $45 billion to $400 billion by 2027 bodes well for Nvidia. Foreseeable competition notwithstanding, Nvidia’s competitive advantage stems from its lightning-fast product delivery, fostering a sturdy developer community dedicated to its software and servers.
Monster Beverage’s Momentum
In a parallel ascendancy, Monster Beverage has witnessed a meteoric climb over the past decade, marked by a consistent pattern of stock splits, with the latest in March last year yielding two shares for each held. With a commanding $60 billion market cap, the energy drink titan continues to exude robust business vigor. Notable sales growth, particularly in its nascent alcohol business, reflected a substantial 58% leap to $42.3 million. The introduction of new products, notably The Beast Unleashed line of malt alcohol beverages, has strategically appealed to existing energy drink customers, leveraging familiar flavors and branding. Monster’s burgeoning success in alcohol amplifies its dexterity in diversifying operations through existing supply chains and distribution networks. With a forward price-to-earnings (P/E) ratio slightly above the Nasdaq-100 average, Monster’s stock alludes to enhanced valuation, buoyed by stellar bottom-line growth with third-quarter net income soaring 40% year over year to $452 million.
Embrace the Fundamentals
Amidst the lure of stock splits and historical market trends, underpinning fundamentals serve as the bedrock of prudent investment decisions. Embracing a holistic evaluation of Nvidia and Monster Energy unveils consistent historical accomplishments. Beyond historical patterns, both entities are poised to deliver enduring value to investors.
Should one consider investing $1,000 in Nvidia?
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Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Monster Beverage and Nvidia. The Motley Fool maintains a disclosure policy.