Most investors have figured out that a few large tech companies dominate not just corporate America, but stock returns as well. Some of those players have been runaway winners in recent years, although there have been a few laggards.
Part of the problem? High overall prices. Retail investors may only be able to buy 1 or 2 shares of a tech dominator when it’s priced at thousands per share.
The solution? A stock split.
Alphabet (GOOG), parent of Google, is doing just that, with a 20-for-1 split. With shares closing in on $3,000 each, a split into 20 will turn 1 current share into 20 shares at a more reasonable $150.
That will make shares more accessible to retail investors. And the news came as the company reported blowout earnings, with revenue up 32 percent year-over-year.
Action to take: Google is already a global dominator and worthy of any portfolio. Despite having a market cap near $2 trillion, shares are reasonably priced at 23 times forward earnings, especially given the company’s 68 percent surge in revenue in the past year. Investors may want to pick up a share before the split, as the split may cause a continued move higher.
For options traders, the July $3,500 shares could deliver mid-to-high double-digit growth, and last went for about $30.25. Traders may want to wait for a split, however, as a contract for 100 shares night now could carry a notational value of $300,000.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.