Wall Street's Biggest Stock-Split Stock of 2025 Is All Systems Go 2 Weeks From Today

Globe and Mail

5 days ago

Nothing has captivated the attention of investors more over the last two years than the rise of artificial intelligence (AI). The potential for this game-changing technology to add $15.7 trillion to the global economy by 2030, based on estimates from PwC, suggests a broad swath of AI-hardware and applications companies are going to benefit.
But it's far from the only trend that investors have flocked to. For instance, companies completing stock splits have consistently been a bright spot for the investing community.
Investors are gravitating to stock-split stocks
A stock split offers a way for public companies to cosmetically alter their share price and outstanding share count by the same factor. The "cosmetic" aspect has to do with stock splits not changing a company's market cap or operating performance in any way.
Splits themselves come in two forms, with investors gravitating to one far more than the other. Reverse splits, which are designed to increase a company's share price, are the less-popular of the two. Most companies undertaking reverse splits are doing so from a position of operating weakness and attempting to save their stock from delisting on a major U.S. stock exchange.
In comparison, investors tend to welcome forward stock splits with open arms. This type of split is enacted to make a company's shares more nominally affordable for everyday investors who might not be able to purchase fractional shares through their broker. Public companies whose shares have soared to the point where a forward split becomes necessary are typically out-executing their peers and on the leading edge of the innovative curve within their respective industry.
Last year, more than a dozen industry-leading businesses took the plunge and completed a forward split. Retail powerhouse Walmart kicked things off, with a quartet of AI kingpins following suit, including Nvidia, Broadcom, Super Micro Computer, and Lam Research.
Although 2025 began a bit slower than last year, stock-split euphoria is beginning to bloom. With the first major forward stock split officially in the books, the biggest stock split of the year has been given the green light for two weeks from today.
Wall Street's first stock-split stock of 2025 is official
Before giving credence to what'll be the biggest stock-split stock of 2025, let's recognize the first prominent business to actually announce and complete a forward stock split this year: wholesale industrial and construction supplies giant Fastenal (NASDAQ: FAST).
Fastenal is no stranger to completing forward splits. The 2-for-1 split announced on April 23 and completed after the close of trading on May 21 was its ninth stock split in the last 37 years. Inclusive of dividends paid, Fastenal stock has a total return of more than 214,000% since its August 1987 initial public offering (IPO).
Though Fastenal is cyclical and benefits from periods of economic growth lasting substantially longer than recessions, it's the company's ongoing innovation that's really helped it flourish. Fastenal's managed inventory solutions have helped it learn more about the supply chain needs of its on-site clients. Over time, it's become an integral part of many key supply chains.
But Fastenal isn't the only big-name company that's announced a split this year.
Automated electronic brokerage firm Interactive Brokers Group (NASDAQ: IBKR) announced its intent to conduct a 4-for-1 forward split on April 15, which was more than a week before Fastenal. This marks its first split -- set to take place after the close of trading on June 17 -- since the company went public in May 2007.
Interactive Brokers is a big beneficiary of optimistic investor sentiment. Despite some recent stock market gyrations, the benchmark S&P 500 is still firmly in a bull market. With the exception of the 2022 bear market, which lasted less than a year, and the COVID-19 crash, which completed in five weeks, the bulls have been in firm control for much of the last 16 years. When the benchmark index is climbing, investors tend to be willing to invest more.
Narrowing things down even further demonstrates how the current bull market, which began in October 2022, has been beneficial to Interactive Brokers Group. On a trailing-two-year basis, it's witnessed its customer count, customer equity on the platform, and customer margin loans all notably increase.
Wall Street's biggest stock-split stock of 2025 gets the green light
Although Interactive Brokers' market cap of $87 billion (as of this writing) makes it the largest public company to conduct a split in 2025, it's not the biggest stock-split stock of the year. That honor belongs to auto parts supplier O'Reilly Automotive (NASDAQ: ORLY), which is set to complete a 15-for-1 forward split after the close of trading on June 9. Two weeks from today, on June 10, O'Reilly's stock will open at its split-adjusted price, which should be below $100 per share.
Whereas Fastenal and Interactive Brokers simply announced they would be splitting their respective shares, O'Reilly Automotive put its mammoth stock-split measure up for vote at its annual shareholder meeting on May 15. Based on the voting results of its shareholder meeting, this historic split has been given the green light.
Since going public in April 1993, shares of O'Reilly Automotive have driven to a scorching-hot cumulative return that's approaching 58,000%! For the sake of comparison, the S&P 500 has gained around 1,260% since O'Reilly's IPO.
This undeniable outperformance for Wall Street's biggest stock-split stock of 2025 boils down to three competitive advantages.
O'Reilly Automotive's macro advantage is that consumers are keeping their vehicles longer than ever before. A May 2024 analysis from S&P Global Mobility found the average age of cars and light trucks on U.S. roadways hit a new all-time high of 12.6 years. This is up from an average age of 11.1 years in 2012. With interest rates rising and new vehicles becoming pricier, O'Reilly should be relied on by drivers and mechanics to keep existing vehicles in good working order.
On a more company-specific level, O'Reilly's hub-and-spoke distribution model has worked wonders. The company has 31 distribution centers to go along with nearly 400 hub stores. The hub-and-spoke distribution model ensures that over 153,000 stock keeping units (SKUs) can reach local storefronts the same-day or on an overnight basis.
The final puzzle piece that helps explain why O'Reilly Automotive stock has been unstoppable is the company's phenomenal share repurchase program. Taking after rival AutoZone, which has repurchased around 90% of its outstanding shares, O'Reilly has spent just shy of $26 billion to buy back more than 59% of its outstanding shares since 2011. Businesses with steady or growing net income that regularly repurchase their stock can expect a boost to earnings per share.
All the right boxes are checked for O'Reilly's to continue to outperform.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Interactive Brokers Group, Lam Research, Nvidia, and Walmart. The Motley Fool recommends Broadcom and recommends the following options: long January 2027 $175 calls on Interactive Brokers Group and short January 2027 $185 calls on Interactive Brokers Group. The Motley Fool has a disclosure policy.