Smart investors pay attention to stock splits because they are often an indirect indicator of quality businesses. To elaborate, forward stock splits are only necessary after substantial and sustained share price appreciation, and that rarely happens to mediocre businesses.

Not surprisingly, stocks that split tend to beat the S 500 (SNPINDEX: ^GSPC), at least temporarily, according to Bank of America. Since 1980, stocks have generated an average return of 25% during the one-year period following a stock split announcement, while the S 500 returned 12% during the same period.

This year, (NYSE: WMT) announced a 3-for-1 stock split on Jan. 30, and completed the split after market close on Feb. 23. Shares have surged 35% since the announcement, but Simeon Gutman at Morgan Stanley has set a bull-case target of $109 per share. That forecast implies 47% upside from its current share price of $74.

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Source Fool.com