Stock splits are all the rage on Wall Street this year, as evidenced by the growing number of companies that are doing them. These maneuvers are typically undertaken only after years of strong financial and operating results have driven a company’s stock price out of reach of some small investors. It’s worth noting that even if a stock split is merely a cosmetic change, it can make it easier for employees and other retail investors to buy shares, which is often the reason management gives for doing a stock split.
More important to investors, however, are the results that precede a split. Strong companies tend to keep their momentum going, which is why investors are buying those stocks. So let’s look at three companies that some Wall Street analysts say still have growth potential.
Nvidia: Highest price target, with a 56% increase
Nvidia (NASDAQ: NVDA) has long been the undisputed champion of graphics processing units (GPUs) that power video games, cloud computing, and data centers. As a result, it was well-positioned when generative artificial intelligence (AI) burst onto the scene in early 2023 and sent demand for its high-end chips into the stratosphere.
Nvidia’s GPUs can provide the computing power needed to train and run large, complex language models and other AI systems — and their sales are booming.
In its fiscal 2025 first quarter (which ended April 28), Nvidia’s revenue jumped 262% year over year to a record $26 billion, pushing its earnings per share (EPS) up 629% to $5.98. Chips used for AI had the biggest impact: Revenue from its data center segment, which includes AI processors, jumped 427% to $22.6 billion.
Nvidia’s recent 10-for-1 stock split has captured investors’ imaginations. Even though the stock has gained more than 200% in the past year (as of this writing), some on Wall Street remain incredibly bullish. Among Wall Street analysts following the stock, Rosenblatt’s Hans Mosesmann is the most bullish on the company, with a Buy rating and a $200 price target, which would represent a 56% upside from Monday’s closing price.
The analyst cites accelerating demand for Nvidia’s AI chips and embedded software, which power its top-tier performance. “We expect this software side to grow significantly over the next decade in terms of overall sales mix, with valuation trending upward due to sustainability,” Mosesmann wrote. That suggests Nvidia’s market cap will grow from its current level of around $3 trillion to $5 trillion over the next year or so.
He’s far from alone in his bullishness on Nvidia. Of the 57 analysts who wrote a review of the stock in June, 53 gave it a buy or strong buy rating, and none recommended selling.
Celsius Holdings: Highest price target, 75%
Celsius Holdings‘ (NASDAQ: CELH) The brand’s approach to energy drinks focuses on healthier alternatives and it is carving out market share in a growing and profitable niche. It has quickly climbed the ranks to become the third-largest energy drink brand and completed a 3-for-1 stock split late last year after a long period of robust growth.
Moreover, while its rivals Red Bull and Monster Drink struggled, Celsius stole shares – he got back 47% of the all Energy Drink Category Growth in Q1 It’s worth noting that over the past three years, even as the broader beverage industry has contracted, the energy drink category has continued to grow – and Celsius has been driving this trend.
First-quarter revenue rose 37% year over year to $356 million, while diluted EPS jumped 108%. Celsius faces tougher comparisons this year as it more than doubles its 2023 sales, the result of its partnership with PepsiCoThe beverage giant made a $550 million investment for an 8.5% stake in Celsius and boosted its distribution.
Over the past month, the stock has lost 23% of its value on fears of slowing growth. However, some on Wall Street see the decline as a buying opportunity. Jefferies analyst Kaumil Gajrawala maintains a buy rating and a $98 price target on the stock, which is 75% above Monday’s closing price. The analyst noted that slowing growth is “normal in the second year of a domestic distribution deal” and advised investors to ignore “near-term noise.”
Sirius XM Holdings: Highest Price Target, 100%
Sirius XM Holdings (NASDAQ: SIRI) is the undisputed leader in satellite radio in North America, with 34 million paid subscribers and 150 million total listeners, including its ad-supported music streaming service Pandora, representing an unmatched audience.
Macroeconomic headwinds over the past two years, including higher-than-usual inflation, have weighed on the stock, which is down 41% so far in 2024. Additionally, investors are having an unwarranted knee-jerk reaction to Sirius XM’s upcoming third-quarter merger with Sirius XM Freedom (NASDAQ: LSXMA)its follow-on action and the resulting reverse stock split. While a reverse stock split is usually a sign of trouble, in this case it is a necessary corporate action in connection with the upcoming acquisition, which will bring all of its shareholders under one “roof.”
In the first quarter, revenue increased 1% from a year ago to $2.16 billion, while EPS jumped 17% to $0.07. The improvement in its metrics was fueled by record advertising revenue, the result of a continued recovery in the broader advertising industry. Although the number of paying subscribers declined by nearly 2%, the impact of this decline was partially offset by an increase in average revenue per subscriber.
After the stock’s 27% drop over the past year, some on Wall Street believe the slide has gone too far. Benchmark analyst Matthew Harrigan leads the bull camp on Sirius XM, with a Buy rating and a $6.50 price target on the stock. That’s 100% above Monday’s closing price. Harrigan points to a market disconnect ahead of its upcoming merger with Liberty Sirius XM, as well as a “slew of strategic initiatives” management is undertaking as having the potential to drive growth.
This uncertainty has led to a similar disconnect between the company and its valuation. Sirius XM currently trades at less than 10 times earnings, a ratio that suggests little to no growth ahead. Still, an improving U.S. economy should boost Sirius XM’s growth rate, which could serve as a catalyst for a stock price rally.
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Danny Vena holds positions at Monster Beverage and Nvidia. The Motley Fool holds positions at Celsius, Monster Beverage, and Nvidia and recommends these companies. The Motley Fool has a disclosure policy.
3 Fractional Stocks to Buy Before They Surge 100%, According to Some Wall Street Analysts was originally published by The Motley Fool