2 Top Stock-Split Stocks to Watch in September

Stock splitting divides high-priced stocks into smaller, more manageable pieces. These moves don’t change a company’s fundamental value, but they can make its capital more liquid and accessible to retail investors who might not have access to buying fractional shares. Stock splits can also signal that a business has a lot of recent operational momentum.

Let’s explore why Super Micro Computer (SMCI -2.10%) and Filmed Corporation (CTAS -0.73%) i am two split shares in stock that belong on your investment radar in September and beyond.

Super Micro Computer

Super Micro Computer is one of the main beneficiaries of generative artificial intelligence (AI) boom. With its stock up more than 2,200% over the past five years, management decided to take a 10-for-1 stock split to bring its price back down to Earth. But while Super Micro boasts rapid growth and a very low valuation, things aren’t all peaches and cream.

First, the good news. Super Micro’s business is booming. Fourth-quarter revenue rose 144% year-over-year to $5.3 billion. Net income rose 82 percent to $353 million as data center customers invested in its computer servers and liquid cooling systems to meet a surge in AI-related demand.

That said, Super Micro’s gross margins remain under pressure, falling from 17% to 11.2% year after year as it failed to pass on rising production costs to consumers. This trend suggests that its products are not well differentiated from alternatives in the market.

Short-selling research firm Hindenburg Research also recently suggested that Super Micro engages in deceptive accounting practices — claims that management strongly denies.

With a the forward price-earnings ratio (P/E) multiple of just 13, Super Micro’s super-cheap valuation appears to be priced into these concerns. But investors may want to take a wait-and-see approach for now.

Cintas Corporation

While Cintas is far from a flashy AI company, it has generated its fair share of returns for investors, with shares up more than 200% over the past half-decade. A 4-for-1 stock split will help net him $805 stock back down and allow smaller investors to gain exposure more easily to its growth and stability.

Cintas is a blue chip company supplying business supplies such as uniforms, safety clothing and toilet dispensers through its nationally recognized sales teams. The company has exposure to a wide range of industries, offering him unlimited diversification and practice addressable market. Fourth quarter earnings demonstrate strong performance.

Image source: Getty Images.

Revenue increased by 8.2% year after year to $2.47 billion, while net income increased approximately 19.6% to $414.3 million. Over great operating performance, Cintas sweetens the deal with a dividend yield of 0.78%. While this is less than S&P 500 average yield of 1.32%, investors can expect the yield to increase over time with the profitability of the company.

If there’s one thing not to like about Cintas, it’s the premium rating. With a forward P/E of 49, the stock is nearly four times more expensive than Super Micro despite a drastically lower growth rate.

Which stock is best for you?

While Super Micro Computer and Cintas Corporation are both adopting ambitious stock splits to drive down stock prices, that’s where it’s most of the similarities end. These are two very different companies from a fundamental perspective.

On the surface, the Super Micro looks like a much better buy. Its earnings are growing at a high triple-digit rate, and with a forward P/E multiple of just 13, its stock is almost inexplicably cheap.

That said, Super Micro’s deteriorating margins and negative media attention create uncertainty about its future, which could be reflected in its low valuation. Investors may want to bet on safer (albeit higher value) picks like Cintas for now.