Last Year's Stock-Split Stocks Have Soared. Is a Stock Split a Reason to Buy?

A look at last year's stock-split companies is kind of like taking a stroll along Hollywood's Walk of Fame. It's star-studded, featuring the industry's biggest names. Amazon (NASDAQ: AMZN), Tesla (NASDAQ: TSLA), (NASDAQ: GOOG) (NASDAQ: GOOGL), and Shopify (NYSE: SHOP) were among the market giants to complete stock splits after seeing their shares soar in recent years.

Everyone says a stock split isn't a catalyst for share-price performance. And it's true that after the "operation," the particular stocks I just mentioned didn't significantly rise or fall. But since the beginning of this year, they've taken off, rising in the double and even triple digits. So, could a stock split actually be a signal for gains down the road -- and a reason to buy? Let's find out.

First, a bit of background on stock splits. Companies usually launch these operations when their stock prices have climbed significantly, putting them out of reach for many investors. Of course, these days investors could opt to buy fractional shares and get in on certain companies trading for hundreds or thousands of dollars a share. But certain brokerages don't offer fractional shares, and in some cases, an investor might prefer buying full shares.

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Source Fool.com