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These companies show growth potential that will likely take their high stock prices even higher.
Although the technology sector has suffered in recent months, it has benefited from phenomenal growth over the last decade. Consequently, plenty of stocks that once traded at low nominal prices now fetch hundreds or thousands of dollars per share.
Both Alphabet and Amazon plan to execute 20-for-1 stock splits this summer to address this issue. However, high nominal prices continue to hamper enterprises such as ASML Holding (ASML -2.19%), Booking Holdings (BKNG -0.22%), and MercadoLibre (MELI -3.01%), and their share prices could reduce interest from small investors if the companies don't execute stock splits soon.
Let's find out a bit more about these three stocks that are overdue for a stock split.
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1. ASML Holding
Admittedly, ASML may have a larger issue with name recognition than with its price of approximately $580 per share. It supplies chip foundries with extreme ultraviolet lithography (EUV) equipment -- critical tools for manufacturing the most advanced semiconductors. But because those foundries are its only clients, it's also an easy stock to overlook.
Still, since ASML is the only producer of this EUV equipment, it has had to increase capacity itself to deal with rising demand. Its backlog is now valued at 29 billion euros ($31 billion).
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NASDAQ: ASML
ASML Holding N.V.
Today's Change
(-2.19%) US$ -12,63
Current Price
US$ 563,66
In the first quarter, that backlog helped to drive reported revenue of 3.5 billion euros ($3.8 billion) and net income of 695 million euros ($746 million). While that was a significant drop from year-ago levels, ASML shipped some machines before final testing to meet high demand. Since the company does not recognize revenue until it completes final testing and the customer accepts the product, its accounting rules delayed some revenue recognition.
Nonetheless, ASML forecasts 20% net sales growth in 2022. Also, the stock is trading down by approximately 35% from its $896 per share peak, a price that should more strongly prompt the company to consider a split.
Additionally, even though its P/E ratio of 39 may appear high in today's market, it seems reasonable considering the forecast growth of the industry over the next few years. That, plus a lower nominal stock price, could persuade more investors to take a chance on this relatively unknown but essential company.