Fools know the value of a stock split: zero. It's a non-event. Instead of a $20 bill in your wallet, you've now got two $10 bills. You're eating 12 small slices of your pizza instead of six large 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 80,000 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)

Standard Parking (Nasdaq: STAN)





Quicksilver Resources (NYSE: KWK)





Corus Entertainment (NYSE: CJR)





MICROS Systems (Nasdaq: MCRS)





JA Solar (Nasdaq: JASO)





Robbins & Myers (NYSE: RBN)





Source: Company releases. Ratings courtesy of Motley Fool CAPS.

All these companies are well-liked by investors; their ratings of three stars or better signal that investors are just as confident about the companies' prospects as management apparently is.

Baking in the sun
Although the Chinese calendar calls its new year, which begins next month, the Year of the Rat, and JA Solar seems to pass the smell test. It might have been seen as suspect, having a follow-on offering just seven months after going public. But with demand surging, this solar company needed to have the funds available to strengthen its balance sheet and expand to meet that demand. Currently, JA Solar says it will increase production capacity by about 150% by the end of this year. The stock split ought to make its shares even more liquid than they are now.

Looking at expected earnings, JA Solar is a reasonably priced solar company, at least when compared to U.S.-based rivals like First Solar (Nasdaq: FSLR) and SunPower. With its domestic rivals, though, it tends toward the high end of valuation.

Worldwide demand, however, is what continues to attract CAPS investors like arm847, who foresees the possibility that China will need to do more, and JA Solar stands to profit from it:

A solar company, applied to one of the most ravenous energy markets in the world, who will be increasingly under pressure from the rest of the world's trading economies to do something with global warming. A market made in heaven, and a government that will do some strange things to appease the international marketplace, keep its markets for goods, and therefore support this company no matter what.

Split the difference
How about you? Do you think profits will continue to blind the solar companies? 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.

Red-hot growth stories are just the sort of investments you'll find at Motley Fool Rule Breakers. Grab 30 days of free stock picks by clicking 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 banana-flavored disclosure policy.