Stock splits increase a company's share count and reduce its share price, making the stock more affordable. But the real value in a stock split is what it implies about the underlying company. Stock splits are only necessary after substantial and lasting share price appreciation, which rarely happens without solid financials and some type of competitive advantage.

The companies listed below have split their stocks in the last few years, and all of them have some quality that sets them apart from peers.

  • Alphabet: 20-for-1 split in July 2022.
  • Amazon: 20-for-1 split in June 2022.
  • Apple: 4-for-1 split in August 2020.
  • DexCom: 4-for-1 split in June 2022.
  • Nvidia: 4-for-1 split in July 2021.
  • Palo Alto Networks: 3-for-1 split in September 2022.
  • Tesla: 3-for-1 split in August 2022.
  • The Trade Desk (TTD 1.67%): 10-for-1 split in June 2021.

I would not fault investors for owning any of the stocks listed above. But some look more compelling than others right now. Read on to find out why The Trade Desk is worth buying.

Holiday cheer typically sends the S&P 500 higher in December

The S&P 500 soared 19% year to date as economic resilience and excitement about artificial intelligence (AI) buoyed market sentiment. But history suggests the index is likely to move higher through the holiday season. Since 1928, the S&P 500 and its precursor have produced a positive return in December 73% of the time, with the average return being 1.3%. That makes it the most consistently profitable month by a wide margin. January and March rank second with positive returns 61% of the time.

The probable uptick in consumer spending through the holidays is good news for retailers, but adtech companies like The Trade Desk should benefit as well.

The Trade Desk is gaining market share

The Trade Desk operates a demand-side platform (DSP) that helps media buyers plan, measure, and optimize advertising campaigns across digital channels like connected TV (CTV), desktop, and mobile. Its software leans on AI to help marketers segment audiences and target content more effectively and to automatically optimize campaign performance in real-time.

The Trade Desk is still much smaller than rivals like Alphabet, but the company is rapidly gaining share due to its status as the leading independent DSP (meaning it does not own any media content) and its technological prowess. Management believes its DSP features the most advanced data marketplace in the industry and, as a result, superior AI. Both qualities point to better outcomes for advertisers.

Consultancy Quadrant Knowledge Solutions recently corroborated that opinion when it recognized The Trade Desk as the best adtech platform on the market, citing a higher degree of technological excellence and a more profound customer impact compared to other vendors.

The Trade Desk reported solid financial results in the third quarter. Revenue increased 25% year over year to $493 million, easily outpacing the 9% ad revenue growth reported by Alphabet, and non-GAAP (adjusted) net income jumped 29% to $167 million. The only blemish was somewhat disappointing guidance, but the holiday quarter could turn out better than expected.

CEO Jeff Green provided upbeat commentary on the earnings call, saying, "We're gaining market share as we're outperforming our advertising peers, both big and small."

The Trade Desk is a leader in CTV advertising and retail media

Consultancy Forrester Research recently recognized The Trade Desk as a leader among omnichannel DSPs, citing its unmatched product development strategy and its dominant position in CTV advertising as key differentiators.

Similarly, Morgan Stanley sees The Trade Desk as a leader in retail media because publishers are more likely to share data with an independent adtech company as opposed to Alphabet, simply because Alphabet would use that data to sell its own inventory on YouTube and Google Search. Indeed, The Trade Desk sources data from 80% of the largest retailers in the U.S., providing measurement opportunities for media buyers that are not available on other DSPs.

So what? CTV and retail media are the two fastest-growing segments of the digital ad market, and The Trade Desk is a leader in both. That lays a foundation for rapid revenue growth and continued market share gains in the future.

Indeed, Morningstar analysts expect The Trade Desk to grow revenue at 22% annually over the next five years. That forecast makes its current valuation of 18.8 times sales look reasonable, and it's certainly a discount to the three-year average of 28.5 times sales.

Here's the bottom line: Holiday enthusiasm could drive the S&P 500 higher during December. But even if that doesn't happen, history says the index will move higher in the long run. So patient investors should feel comfortable buying a small position in The Trade Desk stock today.