Several of the world's most exciting companies completed stock splits last year, an operation that lowers the value of each individual share. Companies often launch a stock split after their shares have soared. With a lower share price, the stock becomes more accessible to a broader range of investors.
These operations aren't known to boost share performance -- but it just so happens that two of last year's stock split companies have seen their shares take off this year. I'm talking about Tesla (TSLA -1.11%) and Shopify (SHOP 1.11%).
Telsa has surged in the triple digits, while Shopify has advanced in the double digits. Why? Investors are recognizing these companies have what it takes to deliver even more earnings and share price growth down the road.
And here's the really good news: It's not too late for you to buy them and potentially benefit over time. Let's take a look at each of these stocks to invest in now.
1. Tesla
Tesla is the leader in the electric vehicle market and has grown important metrics such as free cash flow and return on invested capital in recent years. The company has managed to excel even in a difficult market, with challenges such as higher inflation weighing on costs and higher interest rates hurting customers' ability to finance car purchases.
TSLA Free Cash Flow data by YCharts
In the most recent quarter, Tesla achieved record production and delivery levels, revenue reached about $25 billion, and operating margin came in at about 10%. To manage through these difficult times, Tesla has cut costs and lowered the prices of some vehicles, but the company hasn't forgotten about growth. Instead, it's made research and development investment a priority and is focusing on tools and products that could spur growth down the road -- such as self-driving technology.
And speaking of this technology, Tesla's focus on artificial intelligence (AI) could offer the program a huge boost. The company recently launched production of its Dojo training computers, a key tool to improving self-driving systems -- and one that could keep Tesla ahead of rivals.
Today, Tesla shares are trading for 79 times forward earnings estimates, which may look pricey. But several elements could power Tesla's earnings and share price performance over time: resilience during tough times, investment in growth areas like AI, and brand strength and market leadership, to name a few. And that's why it's not too late to get in on this top player.
2. Shopify
E-commerce is an industry growing in the double digits, and Shopify could be one of the biggest winners. The company offers e-commerce infrastructure and all the tools necessary for e-commerce businesses to operate.
Shopify helps with everything from creating a website to managing inventory. With a range of pricing levels, Shopify works with small companies as well as industry giants such as Mattel and Netflix. And it's the U.S. e-commerce software market leader by far, with 28% share, according to Statista.
Shopify made two decisions in recent times that could help supercharge growth in the coming years. First, it sold its logistics business, and keeping a small stake, said it would continue to use the platform as its official service provider. So, Shopify still benefits from the logistics business it built, without this platform weighing on earnings.
Second, Shopify merchants that use Amazon's fulfillment network now are able to offer "buy with Prime" when using Shopify Checkout. This could boost sales on these merchants' platforms, therefore increasing revenue for Shopify.
Meanwhile, Shopify already has demonstrated a track record of growth, with annual revenue rising to more than $5 billion. In the most recent quarter, both merchant solutions revenue and subscription solutions revenue climbed in the double digits. The company also has been improving its free cash flow.
SHOP Free Cash Flow data by YCharts
Finally, let's take a look at Shopify's share performance. The stock has climbed more than 80% so far this year, but considering the company's market leadership and growth prospects, it has plenty of room to run over the long term.
