2 Stock-Split Stocks to Buy Hand Over Fist Before They Soar as Much as 75%, According to Select Wall Street Analysts | The Motley Fool

A resurgence in the popularity of stock splits has been front and center in 2024 as a number of high-profile stocks have taken the plunge. Companies will typically go down this path after years or even decades of robust operating and financial results have pushed the stock price out of reach of some investors. While a stock split doesn’t change anything about the underlying value of the business, it does make shares more affordable for employees and everyday investors, a reason that is often given by companies as the principal motivation for the split.

Investors, however, should focus on the robust results that ultimately led to the stock split, as this is historically an indicator of a business that is firing on all cylinders, which is a brilliant reason to own the stock.

Let’s take a look at two companies that still have significant upside ahead, according to certain Wall Street analysts.

Nvidia: Implied upside 59%

The first stock-split stock with mounds of upside is Nvidia (NVDA -0.36%). The chipmaker was already the gold standard for graphics processing units (GPUs) used by gamers and in data centers. However, the advent of generative artificial intelligence (AI) early last year kicked its business into overdrive.

The company is referred to as a “picks-and-shovels play.” The investing reference has its origins in a famous quote attributed to Mark Twain: “During the gold rush, it’s a good time to be in the pick and shovel business.” For the AI gold rush, Nvidia is supplying the picks and shovels.

The parallel-processing capability of Nvidia’s GPUs was groundbreaking for rendering lifelike images in video games. It allows them to run a magnitude of mathematical calculations simultaneously. It turns out this same functionality works equally well at processing AI.

Nvidia’s recent results show why most analysts on Wall Street are upbeat. For its fiscal 2025 first quarter (ended April 28), Nvidia’s revenue jumped 262% year over year to a record $26 billion, while earnings per share (EPS) surged 629% to $5.98. The company’s data center segment, which includes the processors used for AI, has become the company’s biggest money maker, as revenue of $22.6 billion jumped 427%.

Nvidia recently completed its high-profile, 10-for-1 stock split, and despite posting gains of more than 194% over the past year (as of this writing), Wall Street remains remarkably bullish. Rosenblatt analyst Hans Mosesmann boosted his price target to $200 while reiterating a buy rating on the shares. That represents potential gains for investors of 59% compared to Tuesday’s closing price.

Accelerating demand for AI-centric processors forms the foundation of the analyst’s thesis, but he believes the secret sauce is Nvidia’s proprietary software that’s coupled with its best-in-class chips.

“We anticipate this software aspect will significantly increase in the next decade in terms of overall sales mix, with an upward bias to valuation due to sustainability,” Mosesmann wrote. The analyst’s price target suggests Nvidia’s market will soar to nearly $5 trillion over the next year.

Despite the stock’s epic run over the past year, Wall Street is still remarkably bullish on Nvidia. Of the 57 analysts who offered an opinion on the stock in May, 53 rated the stock a buy or strong buy, and none recommended selling.

Celsius Holdings: Implied upside of 75%

Another stock-split stock with significant upside potential is Celsius Holdings (CELH -0.78%). The company’s focus on health-centric energy drinks has been a hit with consumers. It’s the third-largest energy drink brand and the fastest-growing, contributing 47% of all industry growth in the first quarter, outpacing larger rivals Red Bull and Monster Beverage.

Celsius holds an enviable position in an industry that continues to grow. The energy drink category has continued to generate robust growth over the past three years, even as the broader beverage category has contracted — and Celsius is leading the charge.

In the first quarter, revenue grew 37% year over year to $356 million, while diluted EPS surged 108%. It’s always encouraging when profits are growing faster than revenue, as this illustrates that a company has reached the scale necessary to drop more income to the bottom line.

The company’s sales more than doubled last year as it leaned into its partnership with PepsiCo, which resulted in the beverage and snacks giant making a $550 million investment in Celsius, taking an 8.5% stake in the company and inking a long-term distribution agreement. This is a double-edged sword, however, as Celsius now faces tough comps after such a banner year.

Celsius Holdings conducted its 3-for-1 stock split late last year, thanks to its track record of robust performance. However, fears regarding slowing growth have punished the stock, which has shed 42% over the past month, but some on Wall Street are undaunted. Jefferies analyst Kaumil Gajrawala has a $98 price target and a buy rating on the shares. That represents potential gains for investors of 75% compared to Tuesday’s closing price. The analyst noted the drawdown is “normal in year two of [a] national distribution” agreement and advises investors to ignore the “near-term noise.”

The analyst isn’t the only one bullish on Celsius. Of the 16 analysts who offered an opinion on the stock in May, 14 rated the stock a buy or strong buy, and none recommended selling.