Stock splits are all the rage on Wall Street this year, as evidenced by the growing number of companies participating in them. These maneuvers typically only come after years of strong financial and operating results that have driven a company’s stock price away from some smaller investors. It is worth noting that while a stock split it’s just a cosmetic change, it can make it easier for employees and other private investors to buy shares, which is often management’s reason for doing them.
More important to investors, however, should be the results that precede a split. In general, strong businesses tend to continue to earn their way, providing investors with an ongoing incentive to buy the stock. So let’s take a look at three companies that have more upside ahead, according to select Wall Street analysts.
Nvidia: Higher Target Price Up, 56%
Nvidia (NASDAQ: NVDA) has long been the undisputed champion of graphics processing units (GPUs) powering video games, cloud computing and data centers. As a result, it was well-positioned when generative artificial intelligence (AI) burst onto the scene in early 2023 and pushed demand for higher-end brands into the stratosphere.
Nvidia’s GPUs can provide the computing horsepower needed to train and run large and complex large model languages and other artificial intelligence systems — and their sales are booming.
In the first quarter of fiscal 2025 (which ended April 28), Nvidia’s revenue rose 262% year over year to $26 billion, increasing its earnings per share (EPS) by 629% to $5.98 . Chips used for artificial intelligence had the biggest impact: Revenue from its data center division — which includes artificial intelligence processors — rose 427 percent to $22.6 billion.
Latest from Nvidia 10 to 1 stock split has captured the imagination of investors. Even after the stock is up more than 200% in the past year (as of this writing), some on Wall Street remain incredibly bullish. Among Wall Street analysts covering the stock, Rosenblatt’s Hans Mosesmann is the biggest bull on the company, with a buy rating and a $200 price target, which would amount to a 56% upside from Monday’s close.
The analyst cites accelerating demand for Nvidia’s AI chips and embedded software as fueling its top-line performance. “We anticipate that this aspect of software will grow significantly over the next decade in terms of the overall sales mix, with an upward valuation bias due to sustainability,” Mosesmann wrote. This suggests that Nvidia’s market cap will rise from its current level of around $3 trillion to $5 trillion in the next year or so.
He’s far from alone in his Nvidia silliness. Of the 57 analysts who commented on the stock in June, 53 rated the stock a buy or strong buy, and none recommended a sell.
Celsius Holdings: Bullish price target higher, 75%
Celsius Holdings‘ (NASDAQ: CELH) The approach to energy drinks focuses on healthier alternatives and captures market share in a fast-growing and profitable niche. It quickly rose through the ranks to become the third-largest energy drink brand and staged a 3-to-1 stock split late last year after a long period of strong growth.
In addition, while rivals Red Bull and Monster drink struggled, Celcius stole share — taking 47% of it all growth in the energy drink category in the first quarter. It’s worth noting that over the past three years, even as the broader beverage industry has shrunk, the energy drink category has continued to grow — and Celsius is leading that trend.
In the first quarter, revenue rose 37% year over year to $356 million, while diluted EPS rose 108%. Celsius faces tougher competition this year as its sales more than double in 2023 as a result of its partnership with PepsiCo. The drinks giant made a $550 million investment for an 8.5% stake in Celsius and overcharged its distribution.
In the past month, the stock has lost 23% of its value on concerns about slowing growth. However, some on Wall Street see this decline as a buying opportunity. Jefferies analyst Kaumil Gajrawala maintains a buy rating and $98 price target on the stock — 75% higher than Monday’s closing price. The analyst noted that the slower growth is “normal in the second year [a] national distribution agreement’ and advises investors to ignore the ‘short-term noise’.
Sirius XM Holdings: Higher Target Price Up, 100%
Sirius XM Holdings (NASDAQ: SIRI) is the undisputed leader of satellite radio in North America. It has 34 million paid subscribers and 150 million total listeners, including the ad-supported music streaming service Pandora – an audience that is unmatched.
The macroeconomic headwinds of the past two years, including higher-than-usual inflation, have weighed on the stock, which is down 41% so far in 2024. Additionally, investors are having an unwarranted knee-jerk reaction to Sirius XM’s upcoming third- quarter merge with Liberty Sirius XM (NASDAQ: LSXMA), the tracking stock and the resulting reverse stock split. While a reverse stock split is typically a sign of trouble, in this case, it’s a necessary corporate action as part of an upcoming takeover that will bring all of its shareholders under one roof.
In the first quarter, revenue rose 1% year over year to $2.16 billion, while EPS rose 17% to $0.07. Its improved metrics were fueled by record ad revenue, the result of a continued recovery in the broader advertising space. While paid subscription was down nearly 2%, the impact was partially offset by an increase in average revenue per subscriber.
In the wake of the stock’s 27% decline over the past year, some on Wall Street believe the selloff has gone too far. Report analyst Matthew Harrigan leads the bull camp on Sirius XM, with a buy rating and a $6.50 price target on the stock. This is 100% higher than Monday’s closing price. Harrigan points to a decoupling of the market ahead of its impending merger with Liberty Sirius XM, as well as a “concentration of strategic initiatives” undertaken by management as driving growth.
This uncertainty has led to a similar disconnect between the business and its valuation. Sirius XM currently trades at less than 10 times earnings, a ratio that suggests almost no growth going forward. However, the improving US economy should boost Sirius XM’s growth rate, which could act as a catalyst for a share price rally.
Should you invest $1,000 in Nvidia right now?
Before you buy shares in Nvidia, consider the following:
The Motley Fool Stock Advisor The analyst team has just identified what they think it is 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce huge returns in the coming years.
Think about when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $780,654!*
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Danny Vena has positions in Monster Beverage and Nvidia. The Motley Fool has positions and recommends Celsius, Monster Beverage and Nvidia. The Motley Fool has one disclosure policy.
3 Dividend Stocks You Should Buy Before They Plunge Up 100%, According to Select Wall Street Analysts originally published by The Motley Fool
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