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 smaller slices of the same 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:

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

Whatever 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 whether 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 110,000 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.

Let's 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


CAPS Rating (5 max)

Southern Copper (NYSE:PCU)





Atwood Oceanics (NYSE:ATW)





Buenaventura (NYSE:BVN)





Titan International (NYSE:TWI)





Source: Company SEC filings. Ratings courtesy of Motley Fool CAPS.

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

Banging away at copper
Among stocks executing more traditional splits, Southern Copper's shares began trading today at their new split-adjusted price. The Peruvian miner has weathered not only a strike at mines, as workers call for greater sharing of economic wealth, but also a magnitude 6.0 earthquake that somehow failed to damage its copper operations. With copper prices bottoming out, and expectations high that they will move strongly upward again, Southern Copper is seen as a hard deal in a soft metal.

With copper companies like Teck Cominco (NYSE:TCK) shoring up supply through acquisitions, as top-rated CAPS All-Star TMFSinchiruna pointed out back in April, Southern Copper should begin moving north:

The only evidence we need to know that copper will continue to go higher is the lengths that countries and mega-corporations are going to to ensure future copper reserves / supply. Teck Cominco buying Global Copper the other day. [Aluminum Corp. of China] and Alcoa [ (NYSE:AA)] joining forces to buy shares of Rio Tinto [ (NYSE:RTP)].

Drill into this
Offshore drilling contractor Atwood Oceanics will split next week, but the shares are expected to remain a gusher of wealth. Analysts point to the driller as an example of top-notch growth in the industry, and they keep raising their expectations for the Motley Fool Stock Advisor recommendation.

That view matches those of investors like Guardian21, another CAPS All-Star. Guardian21 feels that regardless of oil's price direction, demand is still growing, which will only benefit drillers like Atwood:

Whether oil goes to $150 or to $100 a barrel, demand for oil will continue to out pace supply. The oil drillers will benefit from this trend. In addition, it appears that their once cyclical earnings are now becoming more stable, as these drillers continue to lock in long term contracts for their services.

Split the difference
How about you? Will profits continue to flow to oil companies? Get in the mix with Motley Fool CAPS, and share with tens of thousands of your fellow investors how you feel about these stock split stories.