3 Dividend Stocks to Buy Short Before Rising Up to 204%, According to Select Wall Street Analysts

One of the most exciting developments for investors in recent years is the return to popularity of stock splits. Although the practice was common in the late 1990s, it fell out of favor but has enjoyed a revival in the past few years. This corporate action is usually taken in response to years of strong operating and financial results that ultimately lead to a prosperous stock price.

History suggests that the best performing companies tend to keep firing on all cylinders. Companies that issue forward stock splits generate stock price increases 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 split stocks with room to run, according to certain Wall Street analysts.

Broadcom: Implied Increase 76%

The first split stock with great growth potential is Broadcom (NASDAQ: AVGO). The company occupies an enviable position in technology circles, providing a wide range of software, semiconductor and security offerings spanning the cable, broadband, mobile and data center spaces. Broadcom says that “99% of all Internet traffic passes through some type of Broadcom technology,” giving it a critical position in the ongoing artificial intelligence (AI) revolution.

Recent results show that business is booming. In the second quarter, revenue of $12.5 billion rose 43% year over year, fueling adjusted earnings per share (EPS) of $10.96, which rose 6%. It is worth noting that the recent acquisition of VMWare is affecting the company’s profit margin, which management expects to normalize by 2025. The company expects its strong growth to continue, raising its full-year revenue forecast to 51 billion dollars, which would represent an increase of $42. %.

Its track record of execution and robust growth led to Broadcom’s 10-for-1 stock split in mid-July. Despite the 152% gains since the start of last year, many on Wall Street remain incredibly bullish. Just before the split last month, Rosenblatt analyst Hans Mosesmann reiterated his buy rating and raised his price target to a split-adjusted $240, representing a potential upside for investors of 76% over Wednesday’s closing price.

The analyst believes that accelerated adoption of generative AI will fuel higher sales of AI-related hardware, including application-specific integrated circuits (ASICs), networking and switching chips. VMWare integration is also expected to start making a significant contribution.

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He is not alone in his bullish take on Broadcom. Of the 38 analysts who provided an opinion on the stock in July, 33 rated the stock a buy or strong buy and none recommended sale.

Nvidia: A 99% Default Advantage

The second stock divided into stock with a load of potential is Nvidia (NASDAQ: NVDA). The company is the leading supplier of graphics processing units (GPUs) used in video games, cloud computing and data center operations. This helped Nvidia quickly dominate the market for chips used for generative AI, which supercharged its sales because these GPUs provide the computing power needed for AI.

For its fiscal first quarter 2025 (ended April 28), Nvidia generated record revenue of $26 billion, up 262% year-over-year, resulting in diluted EPS of $5.98, which grew by 629%. The results were driven by the data center segment — which includes AI processors — as revenue for the segment rose 427% to $22.6 billion.

Nvidia’s strong results have propelled its share price up 600% since the start of 2023, leading to its 10-for-1 stock split in June. However, some on Wall Street believe there is much more to come. Mosesmann has a Buy rating on Nvidia and a Street-high price target of $200, which represents a 99% upside potential from Wednesday’s close.

The analyst believes that many of his peers fail to understand the importance of software integrated with Nvidia’s AI processors, giving it a serious competitive advantage. “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,” Mosesmann wrote in a note to clients.

He’s not the only one who thinks there’s more to come. Of the 58 analysts who covered the stock in June, 53 rated the stock a buy or strong buy, and none recommended sale.

Super Micro Computer: 204% Default Surcharge

The last of our trio of split stocks with lots of running room is Super Micro Computer (NASDAQ: SMCI)also known as Supermicro. The company has been providing custom servers to the technology industry for more than 30 years. Supermicro’s core approach to rack-scale servers with direct liquid cooling technology is a perfect match for the rigors of AI processing, as is the company’s legendary focus on energy efficiency.

Supermicro has established strong working relationships with all the major chipmakers, ensuring it can get its hands on the most in-demand processors, including those from Nvidia, Advanced microdevicesand Intel.

In the fourth quarter of fiscal 2024 (ended June 30), Supermicro generated record revenue of $5.3 billion, up 143% year-over-year and 38% quarter-on-quarter. This resulted in adjusted earnings per share (EPS) of $6.25, up 78%.

While some investors were concerned about the company’s shrinking profit margin, CEO Charles Liang cited a bottleneck involving some server components that pushed some deals into the next quarter. This in turn changed the product mix to include more lower margin sales. A comeback is expected in the coming quarters.

Supermicro’s robust results since the start of last year have sent its stock price up 516%, prompting the company to announce a 10-for-1 stock split just this week. Some on Wall Street believe this is just the beginning. Loop Capital analyst Ananda Baruah has a buy rating on the stock and a $1,500 price target. This represents a potential upside of 204% compared to Wednesday’s closing price.

The analyst believes investors continue to underestimate Supermicro’s sales potential, suggesting it can generate a revenue run rate of $40 billion in fiscal 2026, up from less than $15 billion by the end of fiscal 2024. Management forecasts a similar performance, guiding net sales of about $28 billion in the middle of its fiscal 2025 guidance.

Wall Street seems to agree. Of the 17 analysts who provided an opinion in July, 12 rated the stock a buy or strong buy and none recommended sale.

A note on evaluation

Each of these split stocks has a long run ahead of them, but despite their prospects, they remain attractively priced. Nvidia, Broadcom, and Supermicro currently trade for 36 times, 29 times, and 14 times forward earnings, compared to a price-to-earnings (P/E) ratio of 27 for the S&P 500. While two of the three earn a slight premium to the broader market, their business and performance track record, soaring share price gains and solid future potential make them worth every penny.

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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 Advanced Micro Devices, Bank of America and Nvidia. The Motley Fool recommends Broadcom and Intel and recommends the following options: long January 2025 $45 calls on Intel and short $35 August 2024 calls on Intel. The Motley Fool has a disclosure policy.

3 Stocks Dividends to Buy With Handed Fist Before Soaring 204%, According to Select Wall Street Analysts was originally published by The Motley Fool