3 Dividend Stocks to Buy Before Rising Up to 215%, According to Select Wall Street Analysts

Over the past few years, there has been a resurgence in the popularity of stock splits. The practice was common in decades past, but fell out of favor, only to return in recent years. Typically, companies will embark on this course after years of strong business and financial results, leading to an increase in share price.

Evidence suggests that the strong performances that precipitated the stock split are likely to continue. Companies that conduct stock splits experience stock price gains of 25%, on average, in the year following the announcement, compared to average gains of 12% for S&P 500according to data compiled by Bank of America analyst Jared Woodard.

Here are three stocks broken down into stocks that still have a long run ahead of them, with upside of up to 215%, according to select Wall Street analysts.

1. Broadcom: A 36% implied advantage

The first of our equity splits that represent a compelling opportunity for investors is Broadcom (NASDAQ: AVGO). The company offers a range of software, semiconductor and security products that run the gamut in the mobile, broadband, cable and data center spaces.

Indeed, the company reports that “99% of all Internet traffic passes through some type of Broadcom technology.” This means that Broadcom’s technology will be instrumental in the adoption of artificial intelligence (AI).

The company’s recent results are telling. In Broadcom’s fiscal third quarter (ended Aug. 4), revenue rose 47% year over year to $13 billion, driving adjusted earnings per share (EPS) up 18%, up to $1.24. The company continues to integrate VMWare, which has pressured earnings, but management expects a more significant contribution in fiscal 2025. Broadcom also raised its full-year revenue guidance to $51.5 billion, which would represent an increase of almost 44%.

The company’s track record of solid and consistent growth led to a 10-for-1 stock split in July. The stock has tripled since the start of 2023 — which coincided with the start of the AI ​​revolution — but many on Wall Street believe the best is yet to come. Rosenblatt Securities analyst Hans Mosesmann maintains a buy rating on Broadcom shares and a split-adjusted price target of $240. This represents a potential upside for investors of 36% from Friday’s closing price.

Mosesmann suggests management’s guidance is conservative, leaving the potential for positive revisions. He sees particular opportunities in Broadcom’s application-specific integrated circuits (ASICs) and ancillary products that support networking and switching, which will drive AI-related demand. He also posits that the VMWare integration will boost Broadcom’s results.

The story continues

Mosesmann is not alone in his optimistic prediction. Of the 39 analysts who rated the stock in September, 35 rated the stock a buy or strong buy and none recommended sale.

Investors may be surprised to learn that Broadcom stock trades for less than 28 times next year’s expected earnings, which I think is a bargain given its long history of growth and extensive opportunity.

2. Nvidia: Default Success 85%

The second split stock with a long front track is Nvidia (NASDAQ: NVDA). The company’s graphics processing units (GPUs) have become the gold standard for a variety of applications, including video games, cloud computing and data centers. This technology is also central to generative AI processing, providing the computing power that makes it possible.

This in turn fueled successful results for Nvidia. For the second quarter of 2025 (ended July 28), Nvidia reported record quarterly revenue, which rose 122% year-over-year to $30 billion, while its diluted earnings per share (EPS ) rose 168% to $0.67. The results were propelled higher by the company’s data center segment — which includes chips used for AI — as revenue rose 154 percent to $26.3 billion.

It marked Nvidia’s fifth consecutive quarter of triple-digit sales and profit, while its stock has risen 754% since the start of 2023, leading to a 10-for-1 stock split. The stock has been on a ride of roller coaster in recent months, first losing more than a quarter of its value, then making a remarkable recovery, and now sits less than 8% from its all-time high.

There will probably be more to come, but don’t take my word for it. Rosenblatt analyst Hans Mosesmann reiterated his Buy rating and $200 Street-high price target for Nvidia, which represents potential gains of 60% from Friday’s close.

The analyst believes that investors are missing an important element of Nvidia’s success, saying: “The real story is the software that complements all the hardware advantages. We anticipate that this software aspect will grow significantly over the next decade in terms of the overall sales mix, with an upward trend in valuation due to sustainability.”

He’s not the only one who thinks Nvidia still has a long way to go. Of the 60 analysts who issued an opinion in September, 55 rated the stock a buy or strong buy, and none recommended sale.

I have no doubt about the potential for Nvidia stock to go higher from here. In fact, I think the analyst’s price target might be conservative.

3. Super Micro Computer: 215% default surcharge

The last of our trio of split actions is, of course, the most controversial. Super Micro Computer (NASDAQ: SMCI)also known as Supermicro, has been a leading provider of custom servers for more than 30 years.

The company’s secret weapon is the block architecture of its rack-scale servers. By designing the major components interconnected, Supermicro customers can create the system that best fits their specific needs — and price range — rather than simply pulling something off the “rack.” The company is also a clear leader in direct liquid cooling (DLC), which is uniquely suited to handle the rigors of AI. CEO Charles Liang estimates that Supermicro controls between 70% and 80% of the DLC market.

In the fourth quarter of fiscal 2024 (ended June 30), Supermicro generated record revenue that climbed 143% to $5.3 billion. At the same time, the company delivered adjusted EPS that rose 78% to $6.25. While the decline in profit margins raised eyebrows, Liang blamed a temporary block in component parts and product mix for the decline and expects a rebound in due course. That said, the company’s track record of strong results preceded a 10-for-1 stock split that was completed earlier this week.

However, Supermicro has become a battleground in recent weeks. In late August, a brief report by Hindenburg Research alleged, among other allegations, accounting irregularities, sanctions violations and undisclosed third-party transactions. The next day, Supermicro delayed filing its annual report, citing the need to evaluate “the design and effective operation of its internal controls.” If that wasn’t enough, a report has surfaced suggesting that the US Department of Justice is investigating the company, according to the report Wall Street Journal.

Despite the resulting uncertainty, some on Wall Street are undeterred. Following these revelations, Rosenblatt analyst Hans Mosesmann maintained a buy rating and an adjusted Street-high price target of $130 on the stock. This represents a potential upside of 215% from Friday’s closing price. The analyst suggests that the recent stock price correction “seems exaggerated when we consider the Hindenburg dynamic as old or inaccurate news.”

Not surprisingly, others on Wall Street have taken a “wait and see” approach. Of the 18 analysts who covered the stock in September, nine still rate the stock a buy or strong buy. The rest recommend holding and none recommend for sale.

As a short seller, Hindenburg Research has a vested interest in driving the stocks it targets down, so its motives are suspect. Furthermore, he has a mixed track record, so his conclusions should not be considered gospel.

For investors with the stomach for a little risk, I think the opportunity to own Supermicro shares outweighs the risk posed by the — as yet — unsubstantiated claims of a short seller. And as a Supermicro shareholder, my money is where my mouth is. Finally, at just 21 times earnings, Supermicro stock is a bargain.

Should you invest $1,000 in Broadcom right now?

Before buying Broadcom stock, consider the following:

The Motley Fool Stock Advisor the analyst team has just identified what they think they are 10 best stocks for investors to buy now… and Broadcom was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $765,523!*

Stock advisor provides investors with an easy-to-follow blueprint for success, including portfolio construction guidance, regular updates from analysts, and two new stock picks every month. The Stock advisor the service has more than four times return of the S&P 500 since 2002*.

See the 10 stocks »

*The Equity Advisor returns as of September 30, 2024

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has positions in Nvidia and Super Micro Computer. The Motley Fool has positions in and recommends Bank of America and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

3 Dividend Stocks You Need to Buy Before They Rise 215%, According to Select Wall Street Analysts was originally published by The Motley Fool