By Shawn Langlois, MarketWatch
Much of the buzz on Wall Street these days focuses on the idea that value is positioned for a comeback. Tech stocks are running out of steam, can't go on forever, time for new leadership, etc.
But history is on the side of Tesla (TSLA) and Apple(AAPL) , according to online broker eToro, which took a look at decades of data to find that a basket of the biggest name brands have historically enjoyed a 33% rally, on average, a year after splitting their stock.
By comparison, Amazon (AMZN) has split its stock three times, rallying an average of 209% the following year. Microsoft (MSFT) has done it nine times, with a gain of 47%. It's not just tech either. McDonald's (MCD) has split nine times, as well, averaging a 22% annual return. Coca-Cola (KO) , nine times for 11%.
Apple's history isn't quite as stellar as all those, with its four previous splits resulting in an average gain of 10.4% in the following year. However, that includes a disastrous 61% plunge in the 12 months after its June 2000 split, which was a result of the popping of the dot-com bubble.
"Retail investors are increasingly engaging with the financial markets, and many see the benefit in investing in the companies who produce products they love and use daily," eToro analyst Adam Vetesse said. "Tesla and Apple are two such companies."
"The ability to buy into these highly popular companies at more attractive [post-split] prices will prove too tempting to turn down for many investors," Vetesse said, adding that both stocks could "rocket" even higher than the historical averages in this climate.
-Shawn Langlois; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
August 29, 2020 12:07 ET (16:07 GMT)
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