While stock splits aren't value-creating vehicles per se, these events can allow more investors access to stocks that otherwise have risen to such steep prices that buying even one or two shares may be out of reach. There were several well-known stock splits that took place in 2022, and the current market environment has discounted some of these companies even further.
If you're bargain-hunting for wonderful businesses that fit this bill in the 2023 market environment, here are two recent stock-split stocks that are primed to deliver sustainable growth for investors in the next decade and beyond.
1. Shopify
Shopify (SHOP 1.11%) executed a 10-for-1 stock split on June 28, 2022. Although shares of Shopify are still trading up by double digits since the beginning of 2023, the stock is still down by roughly 40% from where it was trading 12 months ago. Shopify continues to prove its advantage as a leading e-commerce platform and is continuing to grow market share and build out its business even as share prices have remained highly volatile.
According to data from BuiltWith, of the roughly 13 million e-commerce sites that are live in the U.S. alone, 25% of those are built on Shopify's software. That gives Shopify the leading market share of any e-commerce platform provider in the country. Shopify has made it easier than ever, even for someone with little to no business experience, to build a brand from the ground up with a suite of tools, applications, and integrations that enable everything from seamless product sourcing, billing, and supply chain management to workflow automation and payroll. It should come as no surprise that Shopify's merchant base is only expanding. Merchant solutions revenue jumped 26% year over year in the third quarter of 2022 -- driving a 22% year-over-year increase in total revenue -- while rising 340% on a three-year clip.
And, with the addition of fulfillment company Deliverr to its existing fulfillment network, Shopify is closing the gap on an area that can be an integral make-or-break factor for any company in its industry: supply chain management. As of the third quarter of 2022, management noted that the company was seeing a 75% year-over-year jump in merchant inventory processing through Deliverr cross docks. In September 2022, approximately two-thirds of all packages delivered in the U.S. experienced just a two-business-day delivery time. Besides more efficient and fast fulfillment processes, Shopify is continuing to find new ways to increase merchant growth and retention.
For example, the company finished launching Shop Promise in the third quarter, which is a badge that brands leveraging the Shopify Fulfillment Network can display on their store page to let customers know they offer a smooth and swift delivery process. Management said that merchants who displayed a Shop Promise badge on their store had increased buyer conversion by as much as 9% since the initiative was launched. Shopify also launched an all-in-one point-of-sale hardware device for merchants called POS Go in the third quarter, as well as Shopify Markets Pro, which enables seamless cross-border selling.
As the multitrillion-dollar e-commerce industry continues to grow in the years ahead, Shopify's vast array of offerings for sellers can continue to fuel strong merchant growth and enable an entirely new generation of brands to capitalize on future waves of consumer spending. This creates a compelling buying proposition for long-term investors with the risk tolerance to put capital into this type of growth-oriented business.
2. DexCom
DexCom (DXCM -9.90%) carried out a 4-for-1 stock split on June 10, 2022. While the stock is down slightly year to date, shareholders are still looking at a trailing-three-year total return of nearly 80%. On the whole, the healthcare industry has long been seen as a resilient place to invest capital, largely because the products and services that come out of this industry tend to face strong demand in a wide variety of markets. Dexcom is certainly no exception.
The company is one of the leading developers and manufacturers of continuous glucose monitoring (CGM) devices in the world. Over the past decade, the company has seen revenue grow by more than 1,400%. CGM devices are an essential part of daily life for many individuals with diabetes to monitor their blood sugar levels on a consistent basis. DexCom is in the process of launching its latest CGM device, the G7. The system not only has the fastest warm-up time of any CGM device on the market but also is 60% lighter than the G6 model.
Currently, most CGM device users are type 1 diabetics. In a recent interview with MedTech Dive, CEO Kevin Sayer gave some insight into some additional potential use cases for DexCom's products in the future when asked about the expansion of these devices into the type 2 diabetes and even prediabetes consumer markets. He noted:
It's the learnings from the CGM that can be very beneficial. We find over and over again, when patients with type 2 diabetes on compounds -- not insulin -- wear a CGM, they see a vast improvement in their health. Because of the CGM, they have a dataset whereby they can change their behavior and their lives. On the prediabetes side, it's every bit as visible. If you wear a CGM and see you're having meal spikes above a certain amount and your average glucose is too high, you can see what's coming.
According to the Centers for Disease Control and Prevention, roughly 11% of Americans have diabetes, which translates to about 37 million individuals, based on current figures. And roughly 1.4 million Americans are newly diagnosed with diabetes every year. Bear in mind that these figures don't take into account individuals outside the U.S., nor do they include individuals that have diabetes but have not been diagnosed or are at risk of developing diabetes. In short, there is a tremendous ongoing market opportunity here for DexCom and its products. For long-term shareholders, a buy-and-hold investment in this stock could yield generous returns in the years ahead.
