In this article, we will take a look at the 9 Stocks to Invest in Before They Split Next.

Stock splits often attract investor attention, but their impact is frequently misunderstood. A stock split has no effect on the firm’s fundamental strength or stock valuation, but it increases the number of shares while proportionally lowering the share price. This improves liquidity in the stock and makes it more accessible and affordable to a broader base of investors.

Notably, data from Bank of America suggest that stocks announcing splits outperform the S&P 500, with an average 12-month return of 25.4% compared to the index’s approximately 9%-12% increase. This is frequently driven by market optimism and solid underlying fundamentals.

The financial markets are in an interesting time right now. Despite rising oil costs, increasing Treasury yields, and persistent global disruptions, the broader market has remained resilient, thanks in large part to continued enthusiasm for artificial intelligence.

CIO Group Chief Investment Strategist Steven Whiting, speaking to CNBC on ‘the Closing Bell’, noted that the potency of the AI trade contributes to this gap. He points out that investment in AI, especially in software and hardware, is not directly related to the typical economic cycle.

However, Whiting warns that the global economy is beginning to exhibit signs of strain. Ongoing disruptions to important transportation routes are likely to cause bottlenecks, which could eventually limit economic activity. Although demand may stay steady, the movement of commodities is strongly reliant on energy supply. He added that rising oil prices, particularly for future supplies, indicate that markets expect prolonged disruptions.

Whiting is also skeptical of the Federal Reserve’s ability to impact the current economic environment. Supply-side shocks, particularly in the energy sector, are difficult to resolve with interest rate modifications alone. He raised questions if policymakers can truly manage inflation toward a constant 2% objective in such circumstances.

Our Methodology

We sifted through financial media reports to compile a list of stocks trading above $400 as of April 28 that could potentially split. We then selected the top stocks with large share price surges over the past 5 years and a history of stock splits. From that, we picked the top 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).

9. Ulta Beauty, Inc. (NASDAQ:ULTA)

Ulta Beauty, Inc. (NASDAQ:ULTA) ranks among the stocks to invest in before they split next. On April 20, Jefferies raised Ulta Beauty, Inc. (NASDAQ:ULTA) to Buy from Hold and increased its price objective to $700 from $635. The firm stated that revenue resilience has grown as the beauty industry has expanded and makeup participation has increased.

Ulta Beauty, Inc. (NASDAQ:ULTA) is better positioned to benefit from the cycle, thanks to improved brand novelty and retail execution, and its selling, general, and administrative expense expectations are now adjusted to a more reasonable level.

Jefferies claims that the stock exhibits skepticism and that a more attractive risk/reward profile is supported by modest margin improvement and better cost management.

Meanwhile, UBS kept its $810 price target and reaffirmed its Buy rating for Ulta Beauty, Inc. (NASDAQ:ULTA) on April 17. The reaffirmation comes after the company’s stakeholder event, which UBS saw as an opportunity to assess the retailer’s position in the cosmetics ecosystem. According to UBS, the event showed how important the specialty retailer is to its network of stakeholders, which includes brands, influencers, workers, and consumers.

Ulta Beauty, Inc. (NASDAQ:ULTA) is a specialty beauty retailer in the U.S. that operates more than 1,445 retail stores across 50 states. The company provides a variety of skincare, hair care, cosmetics, perfumes, and salon services.

8. KLA Corporation (NASDAQ:KLAC)

KLA Corporation (NASDAQ:KLAC) ranks among the stocks to invest in before they split next. On April 10, Wolfe Research increased its price target for KLA Corporation (NASDAQ:KLAC) to $2,000 from $1,800 while keeping an Outperform rating on the company’s shares. The firm referenced KLA’s updated forecast at its Investor Day. The company raised its 2026 revenue guidance, predicting a high-teens percentage increase, implying revenue of around $15 billion vs $14.6 billion consensus projections.

The company also marginally raised its 2026 wafer manufacturing equipment forecast, now expecting $135 billion to $140 billion vs $135 billion previously. The new prediction is consistent with competitor Lam Research’s wafer manufacturing equipment estimate.

KeyBanc also reaffirmed its Sector Weight rating for KLA Corporation (NASDAQ:KLAC) on April 8. According to the firm, KLA has a market share of over 56% in the Process Control industry, which is more than six times greater than that of its closest rival. The company’s dominance of the market has resulted in exceptional profits for shareholders, with the stock up 160% over the past year.

KLA Corporation (NASDAQ:KLAC) provides process control, inspection, metrology, and yield management systems, which are critical to advanced semiconductor manufacturing.