There’s no doubt that 2022 has been among the most challenging in recent history for investors, but this year has been a completely different story. After falling around 35% in 2022 — its worst performance since 2008 — the Nasdaq Composite has pulled ahead, gaining 44% so far in 2023 (as of market close Wednesday).
Yet there is precedent that the good times will continue. Since 1972 — Nasdaq’s first full year of operation — every year following Following a rally, the tech-focused index rose 19% on average, suggesting the market will continue to gain ground in 2024.
Furthermore, the renewed interest in Stock distribution is prompting investors to take a fresh look at companies that have split their shares in recent years, as this is historically preceded by years of robust growth. Let’s look at two companies that meet this criteria and should be on investors’ short lists.
One long-time winner that should be on investors’ radar is Shopify (NYSE: SHOP). The stock has gained 2,970% over the past decade, prompting the company to launch a 10 for 1 stock split in mid-2022. Despite the macroeconomic challenges of the past two years, Shopify has a history of strong financial growth, and 2024 will likely be no different.
The biggest challenge of 2022 has been the rapid and precipitous decline of digital retail, which has affected almost every business in the sector. But the industry seems to have turned a corner. After a lull caused by the economic downturn, e-commerce spending is expected to increase from $3 trillion in 2023 to $5 trillion by 2028, a compound annual growth rate of 10%, according to Statista . As a leading provider of Software-as-a-Service (SaaS) tools for online merchants, Shopify will likely benefit from more than its fair share of the rebound in online consumer spending.
Shopify is also doing its part to help online sellers harness the power of generative AI. The company introduced a suite of AI-powered sales tools called Shopify Magic. This includes creating “compelling, high-quality product descriptions” that can be ready in seconds, saving time and helping to increase sales; Sidekick, an AI-powered digital assistant that helps merchants leverage all the tools Shopify has to offer; and automatic text generation tools to speed up many mundane and time-consuming tasks.
A rebound in consumer spending will undoubtedly result in increased online sales. As the leading provider of digital retail solutions to approximately 1.7 million merchants worldwide, Shopify will likely ride this wave.
Another split stock that investors should watch closely is You’re here (NASDAQ:TSLA). The stock has surged 2,450% over the past decade, leading the company to initiate not one, but two stock splits in recent years. Tesla completed a 5-for-1 stock split in mid-2020 and a 3-for-1 stock split in mid-2022.
The stock has soared in 2023, up 108%, but that only tells part of the story. Over the past three years, Tesla is up just 16% and remains 38% off its peak, bogged down by macroeconomic headwinds including decades-long high inflation and China’s interest rate hike campaign. the Federal Reserve. Although higher rates help curb inflation, they discourage consumers from making expensive purchases, including Tesla’s electric vehicles (EVs). Despite these headwinds, the facts suggest the company still has a long way to go.
For example, last year Tesla achieved something that many would have thought impossible just a few years ago. In 2023, the Model Y – the company’s most popular model – became the best-selling car in the world. It is the first electric vehicle to achieve this distinction, according to auto industry publication GreenCars.
Although the final tally is not yet in, Tesla is expected to sell 1.8 million cars this year, which would represent growth of about 38%. While this falls short of the company’s long-term production goals of 50%, it is still impressive, especially considering the headwinds that have buffeted the economy over the past two years. Additionally, with economic conditions stabilizing, the price cuts Tesla used last year to boost vehicle sales are unlikely to happen again. This, in turn, could increase margins, which would entice fair-weather investors back into Tesla stock.
Given improving economic conditions and its position as an industry leader, Tesla will likely experience a broader technology rally in 2024.
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History Says Nasdaq Will Rise in 2024: 2 Split Stocks to Buy Before It Does was originally published by The Motley Fool