Should These Expensive Stocks Split Their Shares?
Barron’s nods this morning to Sanford Bernstein analyst Toni Sacconaghi, who commented today on the untrendy stock split, recommending that companies with highly priced common stocks look into such a move. Sacconaghi singles out Apple (NASDAQ:AAPL) and IBM (NYSE:IBM) as great candidates for a potential split, with high the 5th and 13th highest trading prices on the S&P 500 currently serving as a deterrent to many ‘main street’ investors. The analyst opines, “Both companies have a strong non-institutional investor base, and could gain increased interest from retail investors; and both could reduce share/options issuance – as Apple and other companies have done in the past – following the stock split, which would be modestly accretive to earnings.”
Apple (NASDAQ:AAPL) and IBM (NYSE:IBM) are both very popular among retail (non-institutional) investors, who account for 28% and 38% of the companies’ respective public ownership, though at current price ranges this trend could quickly wane. Sacconaghi also points out that Apple could benefit in limiting its needs for options issuances through a split.
You might be surprised by the list of the most expensive stocks, in terms of straight dollar price, on the S&P 500. Here are the top 5:
1) Priceline.com (NASDAQ:PCLN) trading at $545 and change on a P/E of 47.93 and market cap just north of $27 billion.
2) Google (NASDAQ:GOOG) trading at $539.20 on a P/E of 20.94 and market cap of $173.76 billion.
3) The Washington Post (NYSE:WPO) trading at $421.85 on a P/E of 13.86 and market cap of $3.36 billion.
4) Intuitive Surgical (NASDAQ:ISRG) trading at $372 and change on a P/E of 37.42 and market cap of $14.61 billion.
5) Apple (NASDAQ:AAPL) trading at $356.82 on P/E of 17.01 and market cap of $328.66 billion.