Stock splits have been all the rage for investors in the last month or so.
It all started when Apple Inc. (NASDAQ: AAPL) — the world's largest public company — announced a 4-for-1 stock split late last month. Not to be outdone, electric car and battery manufacturer Tesla Inc. (NASDAQ: TSLA) announced a 5-for-1 stock split soon after.
The reaction from investors has been one of delirious exhilaration. Since the announcement of Apple's stock split, Apple shares are up nearly 30%. Again not to be outdone, since Tesla announced its own split on 11 August, its shares are up nearly 50%. Investors are loving these moves, despite there being no real benefit to shareholders from a stock split.
Now we don't normally see the kinds of lofty share prices that our American friends are used to here on the ASX. A range of large US companies have share prices of more than US$1,000, including Tesla, Alphabet Inc. (NASDAQ: GOOG)(NASDAQ: GOOGL) and Amazon.com Inc. (NASDAQ: AMZN). Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B) has famously never split its Class A shares, partially explaining why one single BRK.A share costs around US$311,000 today.
So today, I thought we'd have a look at the 3 ASX shares that I think are most likely to split their shares in the near future.
3 ASX stock split candidates:
1) CSL Limited (ASX: CSL)
CSL is one of the most expensive shares on the ASX right now, which goes well with the company's title of the most valuable ASX company today. At the time of writing, CSL shares are trading for $295.12 each. Earlier this year, CSL shares reached a new all-time high of $342.75. As such, I think CSL shares are one of the most likely ASX companies to split its shares. It last did so in 2007 with a 3-for-1 split, so the company is no stranger to this process either.
2) Commonwealth Bank of Australia (ASX: CBA)
There was a time (back in 2015) when CSL and CBA were in a two-horse race to hit the $100 a share mark first. Of course, CSL convincingly won that race, whilst Commonwealth Bank is languishing back at $68.95 today. But I think this banking giant could conceivably split its stock in the coming years.
Back in February, CBA was pushing over $90 a share once again. Perhaps coincidentally, the other 3 big ASX banks – National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking GrpLtd (ASX: ANZ) all have share prices in a similar range today (between $17–18). Maybe CommBank just likes to be different, but a 2-for-1 or 3-for-1 split would put this bank back in the same ballpark as the other 3 majors.
3) Afterpay Ltd (ASX: APT)
Our final possibility is the buy now, pay later pioneer Afterpay. This one is a long shot, but considering what the Afterpay share price has done in 2020 so far, we can't rule it out in my view. Afterpay shares today hit yet another record high of $83, making it a '10-bagger' from the lows we saw in March. If this share price moves into the triple-digits in the coming months (not entirely inconceivable), we could well see a stock split for the company, in my opinion.
