3 Stocks That Should Follow Alphabet's Lead and Split

Shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are soaring early on Wednesday, and understandably so. Google's parent company delivered a blowout quarter after Tuesday's market close. However, if there's a little more oomph to the price action it's likely Alphabet's decision to declare a 20-for-1 stock split.

We all know that splits are zero-sum games. If you own 100 shares of Google at $3,000 today you'll own 2,000 shares of Google at $150 when the split is executed. It's the same amount of money. In this golden age of many brokers allowing folks to buy fractional shares it's not as if a high price is a barrier to entry for even retail investors who are just starting out with limited means.

However, investors still see splits as a show of confidence. A company feels that it can declare a split because it believes the stock will keep moving higher from the adjusted starting line. You don't see too many high-flying businesses announcing a split following a bad quarter with a bleak near-term outlook.

Source Fool.com