Stock splits don't actually do anything to augment the values of the companies that perform them, but they can make a stock that has reached a particularly bloated price more accessible to the average investor again. 2022 saw its fair share of stock splits from large companies across a range of sectors.
While a stock split shouldn't induce you to buy or sell a stock in and of itself, there's no denying that the volatile nature of the current market environment has revealed compelling investment opportunities in companies primed for long-term growth despite near-term market pressures.
Here are two such stocks with explosive long-term growth potential to consider adding to your buy basket right now.
1. Amazon
Amazon (AMZN 0.15%) underwent a 20-for-1 stock split on June 3, 2022. The company has remained a mainstay for investors, consumers, and everyone from small to large businesses over the years with its diverse selection of high-growth segments and its penchant for expanding into and disrupting lucrative markets. The company is known for its market-leading e-commerce platform and its rapidly growing cloud business, while it continues to innovate in other sectors from healthcare to grocery to entertainment.
In recent quarters, its growth has decelerated as the aggressive investments it made to build out its operations earlier in the pandemic have been left to contend with a more sluggish economic environment. Against that backdrop, Amazon slashed its corporate employee base by about 6% to reduce its operating costs although these layoffs will only trim its overall workforce by around 1%.
Even as its e-commerce business is being impacted by headwinds from shifting consumer spending patterns, Amazon is still retaining its footprint and growth trajectory in key markets. For example, CEO Andy Jassy said the following in the 2022 earnings call regarding the company's rapidly evolving international e-commerce footprint:
We're very enthusiastic about the business we're building there. I think, just perspective, if you look at the compounded annual growth rate from 2019 to '21, in the U.K., it was over 30%; in Germany, it was 26%; in Japan, it was 21%. And the fact that we haven't given back that growth, and these are all net of FX .... a meaningful amount of market segment share has shifted to our global established e-commerce territories, and we're excited about that.
The company controls a roughly 40% share of the e-commerce industry in the U.S. It is also continuing to grow overall net revenue steadily, with Amazon Web Services alone surging 30% in 2022 despite greater caution by enterprise customers to part with their money than in times past. And its painful annual net loss last year was mostly a paper one, stemming from declines in its common stock investment in beleaguered electric vehicle maker Rivian Automotive.
Imminent changes in consumer and enterprise spending may continue to impact Amazon in the short term. However, the company's generous market footprints and established core businesses have faced many a storm in their time and carried on. There's no reason to think this period will be any different.
2. DexCom
DexCom (DXCM 0.95%) executed a 4-for-1 stock split on June 10, 2022. The company remains a leader in the diabetes care industry with its continuous glucose monitoring (CGM) devices. Bear in mind, the global market for CGMs is rapidly growing both as the incidence of diabetes rises and the adoption of these devices expands in the patient population.
According to an analysis by Grand View Research, the global CGM market is expected to reach a valuation of $11 billion by 2030, compared to its 2022 valuation of $7.8 billion. To give you an idea of the scale of DexCom's footprint in that market, the company reported revenue just shy of $3 billion in 2022, giving it an estimated market share of about 40% globally.
And as of the end of 2022, roughly 1.7 million people around the world were using DexCom's CGM devices, a whopping increase of nearly half a million individuals compared to 2021. DexCom has built a steadily growing and profitable business around its CGM devices, and is in the process of releasing the latest version of its flagship product, the G7.
The new G7 CGM was just officially launched in the U.S. and has already been launched in key international markets including Europe, the U.K., and Asia. The product is billed as being 60% smaller than its predecessor, and with recent coverage expansion by Medicare, remains the most covered and reimbursed device of its kind.
2022 saw the company report earnings to the tune of $341 million, a 57% increase from 2021. DexCom's revenue rose 19% year over year, driven by revenue increases of 16% in the U.S. and 28% in international markets. Meanwhile, the healthcare company's operating income of $391 million represented a 250-basis point hike from 2021.
Another successful product launch and a strong track record of growth portend well for this market leader's continued expansion in the years ahead. Long-term shareholders can benefit in the process.
