Fools know the value of a stock split: zero. It's a nonevent. Instead of a $20 bill in your wallet, you've now got two $10 bills. You're eating 12 smaller slices of your pizza instead of six larger ones.

So if stock splits mean nothing, why do companies do them? There are a few reasons, none of which has anything to do with whether the stock is a good investment. Here are the usual ones:

  • To make the stock look cheap.
  • To increase liquidity.
  • To meet stock-exchange listing requirements.
  • To express a bullish management sentiment.

Regardless of the reason, the market tends to view stock splits as positive events, and a company's shares can get a short-term boost from the news. But if the business isn't a good, long-term company, it doesn't matter if its shares split, or whether you buy them before or after.

A split decision
That's why we pair up stock-split announcements with the sentiments of the 85,000 investors at Motley Fool CAPS. Every day, professional and novice investors rate the prospects of thousands of stocks, resulting in a rating between one and five stars (five being the best). If the best stock pickers think a company's long-term performance is outstanding, and the company has announced the bullish signal to split its shares, maybe investors should take notice.

Then we dive in and see exactly what the CAPS community has to say about some of these companies. Here is a list of stocks that have recently announced splits.



Announcement Date

Date Payable

CAPS Rating  (out of 5)

Southwestern Energy (NYSE: SWN)





Steel Dynamics (Nasdaq: STLD)





GFI Group (Nasdaq: GFIG)





Ritchie Bros. Auctions (NYSE: RBA)





Suncor Energy (NYSE: SU)





Source: Company press releases. Ratings courtesy of Motley Fool CAPS; TBA = to be announced.

Most of these companies are apparently well-liked by investors, as indicated by their CAPS ratings of three stars or better -- a signal that investors are just as confident about the companies' prospects as management apparently is. Yet as the market takes its toll on share prices, the desire to split shares may decline as well, causing a dearth of split announcements -- just as we've seen over the past month or so.

Sun's rising on Suncor
The effects of $100-a-barrel oil have been felt everywhere, including in the shares of the companies that work to get the black gold out of the ground. A place that has previously been overlooked -- but no more! -- is the tar sands. While $30 oil made it uneconomical to try to extract from the tar sands, oil priced at three times that (or higher!) makes it a worthwhile expedition.

Suncor has been enjoying investor confidence in its abilities. Not only can the company extract the oil from the bituminous sand that has trapped it, it can refine it to a point that it would be able to sell, too. That sets it apart from other tar-sands companies like Oilsands Quest (Nasdaq: BQI), which is more in the process of developing its production capacity, rather than actually pumping oil as Suncor does. Although upgrades at Suncor's plants hit some stumbling blocks last year, the company hopes to expand its production capacity to 550,000 barrels per day by 2012 while using its U.S.-based refinery to help handle its expanding crude output.

The economics of importing oil from a friendly neighbor that shares a border with the U.S. is but one of the points CAPS investors like vermonty find attractive in a Suncor investment:

I like buying oil close to home, in a country with a friendly government. Many things help raise oil prices temporarily, like terrorism, hurricanes, holy wars, confiscation by dictators, etc. Suncor probably won't suffer from any of these, but will benefit from the price increases when they occur anywhere else. Their oil and gasoline will cost less to transport to the US than foreign oil. Their raw material base is huge.

Another benefit of buying Canadian is the strength of the "loonie," the Canadian dollar, as CAPS All-Star Scotbgaw points out:

I think that it is still full of upside potential in the current commodities boom. It also has the added benefit of earnings priced in the loonie, so its returns will be magnified as the USD($) is diluted.

Split the difference
What do you think? Will profits continue to electrify utilities? Get in the mix with Motley Fool CAPS and tell tens of thousands of your fellow investors how you feel about these stock-split stories.

Finding good companies beyond U.S. borders is just the sort of journey you'll take at Motley Fool Global Gains. Grab 30 days of free stock picks by clicking here for a trial subscription, risk-free!

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a red-hot disclosure policy.