Though artificial intelligence (AI) has been the hottest innovation on Wall Street for well over two years, it's not the only trend that's helped power Wall Street's major stock indexes to record-closing highs. Excitement surrounding stock splits in some of the market's most influential businesses has been pivotal in sending the broader market higher.
A stock split is a tool publicly traded companies have available that allows them to cosmetically alter their share price and outstanding share count by the same factor. This adjustment is cosmetic in the sense that it doesn't alter a company's market cap or in any way affect underlying operations.
When a public company announces its intent to conduct a split, it can increase or decrease its share price. However, Wall Street's perception of these two options is quite different.
Investors typically shun reverse splits, which increase a company's share price while simultaneously reducing its share count by the same magnitude. Companies that need to increase their share price are often doing so to avoid a delisting from a major U.S. stock exchange. In other words, reverse splits tend to come from struggling businesses.
Image source: Getty Images.
On the other hand, investors prefer companies announcing and completing forward stock splits. This type of split reduces the share price to make it more nominally affordable for everyday investors who can't buy fractional shares through their broker. Businesses enacting forward splits have a knack for out-innovating their competition.
Furthermore, businesses conducting forward splits have historically outperformed the benchmark S&P 500. According to an analysis from Bank of America Global Research, since 1980, public companies completing forward splits have averaged a 25.4% return in the 12 months following their announcement. That compares with an 11.9% average return for the S&P 500 over the same timeline.
Whereas more than a dozen prominent companies, many of which were in the AI arena, announced forward splits in 2024, only a small number of companies have done so this year. Interestingly enough, all major stock splits in 2025 have come from outside the tech sector.
As we steam ahead into July, one magnificent stock-split stock from the "Class of 2025" can be purchased hand over fist, while investors should completely avoid another highflier.
The sensational stock-split stock to buy with confidence in July: O'Reilly Automotive
Though a few high-quality, non-tech companies have recently undertaken forward splits, the one that makes for the smartest buy in July is auto parts supplier O'Reilly Automotive (ORLY 0.47%). Following the close of trading on June 9, O'Reilly completed a 15-for-1 forward split, which reduced its share price from nearly $1,400 to closer to $90.
One of the best aspects of O'Reilly Automotive's operating model is that it's generally recession resistant. While auto parts aren't on the same level of necessity as food and beverages, drivers and mechanics continue to need auto parts and accessories to keep vehicles running regardless of how well the U.S. economy and stock market are performing. Even though discretionary purchases may ebb and flow with the health of the U.S. economy, O'Reilly's operating cash flow tends to be highly predictable year after year.
NASDAQ: ORLY
Key Data Points
In terms of macro catalysts, O'Reilly and its peers are benefiting from the aging of America's cars and light trucks. The latest annual report from S&P Global Mobility, a division of the more familiar S&P Global, shows the average age of cars and light trucks on U.S. roadways expanded to 12.8 years in 2025, up from an average of 11.1 years in 2012.
A combination of higher auto loan interest rates (compared with four years ago), the potential for President Trump's tariff and trade policy to increase new-vehicle pricing, and the aging of America's cars and light trucks, points to O'Reilly Automotive's potential to play an increasingly larger role in keeping existing vehicles running well.
The company's hub-and-spoke distribution network is another reason that helps explain why shares of O'Reilly have risen more than 55,000% since its debut in 1993. O'Reilly closed out 2024 with 31 regional distribution centers that were surrounded by almost 400 hub stores. These hub stores are capable of getting more than 153,000 stock-keeping units to its local stores on a same-day or overnight basis. In short, the products drivers and mechanics need are pretty much always within reach.
But perhaps the most notable aspect of O'Reilly Automotive as an investment has been its share-repurchase program. Since kicking off aggressive stock buybacks in 2011, the company has spent close to $26 billion through March 31, 2025, retiring over 59% of the company's outstanding shares. For a company with steady or growing net income, such as O'Reilly, these buybacks are meaningfully boosting its earnings per share.
While O'Reilly Automotive stock isn't going to go parabolic as we've witnessed from select AI stocks, it does have the foundational catalysts needed to deliver meaningful long-term gains for its shareholders.
Image source: Getty Images.
The stock-split stock that may be headed for disaster: Regencell Bioscience Holdings
However, not every stock-split stock is necessarily worth buying, which is the case with clinical-stage traditional Chinese medicine (TCM) company Regencell Bioscience Holdings (RGC +1.07%).
Regencell took Wall Street by storm through the first five months and change of 2025. Based on its closing price on June 17, shares of the company were up more than 60,100% on a year-to-date basis, with the company's market cap clocking in at more than $38 billion. This mammoth return is what compelled Regencell to enact a 38-for-1 forward split, which became effective after the close of trading on June 13.
Even though shares of Regencell Bioscience have retraced by more than 75% from its year-to-date high, they could easily fall by another 90% and still be considered expensive.
Regencell is an early stage clinical TCM business that has just 12 employees, only four of which are involved with research and development. The company isn't anywhere close to the commercialization stage as of yet, which means it's burning cash, losing money, and sports a going concern warning (i.e., it doesn't have sufficient capital to cover its expected costs over the coming 12 months). In 2024, the company reported a comprehensive loss of just over $4.3 million.
NASDAQ: RGC
Key Data Points
On top of being nowhere close to generating sales and operating cash flow, Regencell's risk factors notes the company hasn't "demonstrated the ability to successfully complete large-scale, pivotal research studies." What's more, risk factors indicate that in-house intellectual property (IP) agreements with existing employees that aren't covered by patents may not protect its IP.
To round things out, there isn't a long-term catalyst that explains or can sustain this monstrous move higher in its valuation. Short interest has remained relatively low, which removes the possibility that a short squeeze will send Regencell stock higher. This looks to be nothing more than a speculative momentum stock -- and speculative moves higher rarely have staying power.
With more shares outstanding following Regencell Bioscience's forward split, trading liquidity will improve and it'll be considerably harder for speculative momentum-driven investors to drive its stock artificially higher. Taking into account its dismal near-term operating prospects, it wouldn't be a surprise to see Regencell stock eventually fall back below $1 per share.
