According to an analysis of the Nasdaq Composite going back to 1971, the index has risen an average of 19% every year following a recovery year like 2023. And stock-split stocks could be an excellent way to bet on this positive trend continuing in 2024. Although stock splits don't impact business fundamentals, they can boost investor interest in a company and signify that it is moving in the right direction.

Let's discuss why two recently split stocks, Monster Beverage (MNST 0.41%) and Shopify (SHOP 1.11%), might make great long-term additions to your investment portfolio in the new year and beyond.

1. Monster Beverage

While food and beverage companies may not attract the hype of traditional growth sectors like technology, Monster Beverage bucks the trend. With its shares up by an eyewatering 83,000% over the last 20 years, the energy drink maker has outpaced Apple, Nvidia, and Netflix (as of November 2023).

Unsurprisingly, management has relied on multiple splits to keep its share price manageable and accessible to smaller investors, as listed below:

  • August 2005: 2-for-1 stock split.
  • July 2006: 4-for-1 stock split.
  • February 2012: 2-for-1 stock split.
  • November 2016: 3-for-1 stock split.
  • March 2023: 2-for-1-stock split.

While past performance doesn't guarantee future returns, Monster still enjoys some of the advantages that helped it reach its current level, such as branding. With a market share of 30% in U.S. energy drink sales, the company can leverage its visibility to expand into other opportunities.

In early 2023, Monster began rolling out The Beast Unleashed -- its line of malt alcohol drinks. Although these products have no caffeine or stimulant ingredients, they share Monster's traditional imagery and flavor profile, helping them appeal to its existing customer base.

Alcohol sales grew by an impressive 58% to $42.3 million in the third quarter. While that is still a small fraction of the total $1.86 billion Monster earned in the period, it shows that the drink maker is still capable of successfully launching new products into the market, giving new investors a lot to be optimistic about for the future.

2. Shopify

While Shopify was hit hard by the bear market in 2022, it hasn't always been an underperformer. Shares of the e-commerce enabler have risen by an impressive 2,750% since hitting public markets in 2015. The company conducted its first stock split in June 2022, giving shareholders a whopping 10 units for each one they previously owned. It isn't too late for investors to bet on Shopify's long-term success as it reworks its business model to maximize margins and profit potential.

Shopify operates a digital platform designed to help small businesses sell their products online by facilitating things like website creation and payments. The e-commerce market faced challenges in the post-pandemic economy as stay-at-home shopping waned, while inflation and rising interest rates hurt consumer purchasing power. Now, macroeconomic conditions are improving. And Shopify has emerged from the crisis more streamlined and focused than before.

Shopify's third-quarter revenue rose 25% year over year to $1.7 billion as more merchants joined the platform. The spinoff of its logistics arm to Flexport in 2023 provided a much-needed boost to gross margins (which rose from 48.5% to 52.6% in the period).

With a price-to-earnings (P/E) multiple of 79, Shopify stock is quite expensive compared to the S&P 500 average of 21. But the premium price tag makes sense considering Shopify's burgeoning profitability. The company generated an operating income of $122 million, up from a loss of $346 million in the prior-year period. And it can quickly justify its valuation as it continues to scale up its business.

Which stock is best for you?

While Monster Beverage and Shopify are both great stock split companies poised for success in 2024, they serve different investment strategies. With a strong brand giving it a rock-solid moat, Monster looks like the safer bet. Shopify's high valuation means management will have to work harder to justify the stock's price tag, which could mean more risk.