http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split Invest in Stocks That Split Stock splits are supposed to give you two shares instead of one but not necessarily increase the value of your investment. Many companies like to see their stock trade within a certain range. So, when the stock goes up a bit they split the stock. The surprising thing is that stocks that split seem to do better on the average than stocks that don’t. So, should you invest in stocks that split? USA Today says that the reason investors love stock splits is mostly a matter of psychology. Stock splits might be one of the last corners of the market where emotion seems to trump logic. There’s absolutely no quantitative difference between owning 100 shares of a $20-a-share stock and 200 shares of a $10-a-share one following a 2-for-1 split. Yet, there have been 41 stock splits by companies in the Standard & Poor’s 500 over the past three years. These stocks are up an average of 33% from the time they split to Wednesday’s close – topping the Standard & Poor’s 500’s average gain of 23.6% during the same time. That means holding all the companies’ shares that have split – on average – has been a winning strategy. Why is this? Is it all perception? Here are two thoughts that come to mind. Buying in Round Numbers Certain types of investors like certain stocks and they like them at a certain price. If you have $5,000 to invest every quarter and you would like to buy 100 shares you might decide to stock with your regular $50 a share stock. If the stock climbs to $85 a share and then splits you can get your 100 shares for $4,250 and will be happy. There may well be people for whom this approach works. Evidence of Success Growth stocks run the risk of being overpriced. If Microsoft had never split it would be trading for tens of thousands of dollars a share today. Splitting the stock keeps the price where an investor can pick of a few shares within his price range. And, if a company splits their shares every few years it is because they are growing. Stock splits over time are evidence of success. NASDAQ talks about how to identify growth stocks. Many investors attempt to find growth stocks, but how does an individual investor seek out and identify the best and brightest growth stocks for their portfolio? A savoy investor looks for specific fundamental characteristics to unearth these companies. First, growth traders look for companies that are expected to grow at an above average rate, corresponding to the market as a whole. Further, analysts look for better than average cash flows, earnings, and or revenue growth. When you invest in stocks that split routinely you are investing in stocks with stable and steady growth. Growth and Value The Motley Fool asks if a growth stock can be a value stock. Can a growth stock simultaneously be a value stock? The answer to this question is yes –

1. Invest in Stocks That Split
By www.ProfitableInvestingTips.com

2. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Stock splits are supposed to give you
two shares instead of one but not
necessarily increase the value of your
investment.

3. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Many companies like to see their
stock trade within a certain range.

4. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
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Before We Continue…

5. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
So, when the stock goes up a bit they
split the stock.

6. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
The surprising thing is that stocks that
split seem to do better on the average
than stocks that don’t.

7. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
So, should you invest in stocks that
split? USA Today says that the
reason investors love stock splits is
mostly a matter of psychology.

8. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Stock splits might be one of the last
corners of the market where emotion
seems to trump logic.

9. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
There’s absolutely no quantitative
difference between owning 100
shares of a $20-a-share stock and
200 shares of a $10-a-share one
following a 2-for-1 split.

10. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Yet, there have been 41 stock splits
by companies in the Standard &
Poor’s 500 over the past three years.

11. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
These stocks are up an average of
33% from the time they split to
Wednesday’s close – topping the
Standard & Poor’s 500’s average gain
of 23.6% during the same time.

12. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
That means holding all the companies’
shares that have split – on average –
has been a winning strategy.

13. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Why is this? Is it all perception? Here
are two thoughts that come to mind.

14. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Certain types of investors like certain
stocks and they like them at a certain
price.

15. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
If you have $5,000 to invest every
quarter and you would like to buy 100
shares you might decide to stock with
your regular $50 a share stock.

16. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
If the stock climbs to $85 a share and
then splits you can get your 100
shares for $4,250 and will be happy.

17. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
There may well be people for whom
this approach works.

18. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Evidence of Success

19. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Growth stocks run the risk of being
overpriced.

20. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
If Microsoft had never split it would be
trading for tens of thousands of dollars
a share today.

21. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Splitting the stock keeps the price
where an investor can pick of a few
shares within his price range.

22. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
And, if a company splits their shares
every few years it is because they are
growing.

23. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Stock splits over time are evidence of
success.

24. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
NASDAQ talks about how to identify
growth stocks.

25. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Many investors attempt to find growth
stocks, but how does an individual
investor seek out and identify the best
and brightest growth stocks for their
portfolio?

26. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
A savoy investor looks for specific
fundamental characteristics to unearth
these companies.

27. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
First, growth traders look for
companies that are expected to grow
at an above average rate,
corresponding to the market as a
whole.

28. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Further, analysts look for better than
average cash flows, earnings, and or
revenue growth.

29. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
When you invest in stocks that split
routinely you are investing in stocks
with stable and steady growth.

30. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Growth and Value

31. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
The Motley Fool asks if a growth stock
can be a value stock.

32. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Can a growth stock simultaneously be
a value stock?

33. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
The answer to this question is yes –
though, it’s an uncommon occurrence.

34. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Normally growth stocks trade at
premium valuations indicative of their
growth rate.

35. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
However, once in a blue moon, a
growth stock comes along that also
has a relatively low P/E and PEG ratio
(a measure of future revenue growth
relative to P/E), qualifying it as a value
stock as well.

36. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
They give three examples, Gilead
Sciences, 3D Systems and Apple.

37. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
Apple does not generally split its stock
but it may eventually have to.

38. http://profitableinvestingtips.com/stock-investing-tips/invest-in-stocks-that-split
The point is that when you invest in
stocks that split you are investing in
growth and value.