Last year was a big year for stock splits. Some of the world's most well-known companies have seen their stocks soar into the thousands of dollars per share in recent years. The move to split a stock doesn't change a company's market value -- but by offering more shares to current holders, it lowers the price of each individual stock. That makes the shares more accessible for a broader range of investors.
The move is positive for another reason too. It shows a company has confidence in the ability of its shares to embark on another wave of gains. Two of last year's stock split companies have climbed in the double digits this year. And I predict they also will lead gains in the next bull market. Let's check them out.
1. Amazon
Rising inflation has presented a big challenge for Amazon (AMZN 2.74%). The e-commerce giant saw its costs soar -- and its customers these days generally have less money to spend. As a result, Amazon last year reported its first annual loss in nearly a decade.
But there's reason to believe the worst is over. Amazon has used these troubled times as an opportunity to improve its cost structure. Some moves include cutting jobs, focusing on efficiency within the fulfillment network, and investing in the most profitable parts of the business.
These efforts already are bearing fruit. In the most recent earnings report, Amazon's operating cash flow increased 38%. And the company's outflow of cash improved to $3.3 billion from an outflow of more than $18 billion in the year-earlier period.
One particular recent move could set Amazon up not only for recovery -- but for improvements in earnings over time. The company has switched to a regional fulfillment model in the U.S. from a national model. This should result in lower costs and faster delivery speeds.
As the economic environment improves, consumers should have more to spend on Amazon.com. And customers of Amazon Web Services probably will be able to increase their spending too. This means, even after Amazon's 40% increase so far this year, the stock has room to run -- especially in a future bull market.
2. Tesla
Tesla (TSLA 0.09%) reported several records last year. The electric vehicle (EV) giant announced its highest ever quarterly revenue, net income, and operating income in the fourth quarter. Net income for the year doubled to more than $12 billion. The company managed to accomplish all of this even in a difficult economic environment. And Tesla continues to increase vehicle deliveries in the double digits. All of this shows the strength of the EV maker.
In the latest quarter, though, Tesla disappointed some investors. That's because net income and operating margin both declined. One big reason behind this is the fact that Tesla lowered prices on some of its vehicles. While this clearly is painful in the near term, it's actually a good thing for the long term. By doing this, Tesla is opening up the opportunity to buy its EVs to a wider range of people. This is key especially in today's tough economic environment.
Tesla remains the market leader -- but it faces plenty of competition. Making certain models more affordable may help the company stay ahead.
In recent times, the EV maker also has done some talking about its plans for a fleet of robotaxis. Tesla has spoken of this in the past and delayed the launch. So, it's not clear if this will happen soon or ever. If it does, it could be big.
But even if it doesn't, Tesla's EV business today and its growth prospects still make the company a solid growth investment. And that's why, in a bull market, Tesla should lead the pack.
