Warren Buffett isn't exactly a fan of stock splits. He's promised in the past to never split Berkshire Hathaway's class A shares, which currently trade at more than $529,000. However, Buffett did go along with the creation of class B shares in 1996 to give investors a less expensive alternative to own a stake in Berkshire.
While Buffett remains opposed to splitting Berkshire's class A shares, he's poised to benefit from a couple of upcoming stock splits. Here are two Buffett stocks with splits on the way that you can buy right now.
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1. Amazon.com
Amazon.com (AMZN 0.89%) delighted investors earlier this year when it announced a 20-for-1 stock split. This marks the fourth stock split by the internet giant. In each of Amazon's previous three stock splits, its share price soared by at least 48% afterward.
However, you don't have to wait until Amazon splits its stock in June to buy shares. If there's another post-split surge, you'll profit from it whether you buy now or later.
Buffett has referred to himself as "an idiot" for not buying Amazon sooner than he did. Even when Berkshire bought shares of Amazon in 2019, the decision was made by one of Buffett's two investment managers, rather than the Oracle of Omaha himself.
NASDAQ: AMZN
Key Data Points
Amazon isn't the growth machine that it once was. With the company's market cap topping $1.5 trillion, that's to be expected. However, don't write off the company's prospects going forward.
Its Amazon Web Services (AWS) cloud unit continues to grow at a solid pace. Amazon is expanding the same-day delivery of items purchased on its e-commerce platform, thereby increasing its competitive advantage.
Amazon's acquisition of MGM gives it a huge library of films to add to Prime Video. The debut later this year of a new The Lord of the Rings TV series holds the potential to make Amazon an even more formidable player in the streaming market.
There are also new markets to conquer. Amazon has made initial moves into healthcare with its online pharmacy and Amazon Care telehealth unit. And the company launched its first home robot last year. It also hopes to be a key player in the self-driving vehicle market with its acquisition of Zoox.
2. RH
RH (RH 2.20%) stands out as one of only four stocks in Buffett's portfolio that he added to in the fourth quarter of 2021. Berkshire now owns more than 1.8 million shares of the luxury home-furnishings retailer.
That share count will increase significantly this spring -- whether Buffett chooses to buy more shares or not. RH announced a 3-for-1 stock split in March.
RH's rationale for its stock split was similar to Amazon's. Both companies realize that the moves won't change their valuations. However, RH and Amazon believe that splitting their stocks could make it easier to offer stock-option packages to recruit and retain talented staff.
NYSE: RH
Key Data Points
Like other retailers, RH is facing some challenges. Surging inflation and rising interest rates contribute to uncertainty. CEO Gary Friedman also acknowledged in the company's Q4 conference call that RH "experienced softening demand in the first quarter" connected with the market volatility resulting from Russia's invasion of Ukraine.
However, RH continues to expand. In 2022, the company is opening new stores in San Francisco and England, its first RH Guesthouse in New York, and is launching a new digital portal. It's also planning to open galleries in locations including Paris, Munich, Dusseldorf, Milan, and Madrid.
RH estimates its global total addressable market is between $7 trillion and $10 trillion. The company's management knows that capturing all of this market won't happen. However, they think that a 1% market share isn't out of the question.
That small share represents an opportunity of at least $70 billion annually. RH's market cap today stands below $8 billion.
