The stock market has had a challenging start to the year, with the broad S&P 500 (^GSPC) index declining 7.8% so far this year. The Nasdaq 100 (^IXIC), which is technology dominant, is doing even worse, losing about 15%. As a result, some firms are turning to unusual methods to raise their stock prices, and some are proposing stock splits.

This year, Amazon (NASDAQ:AMZN), Tesla (NASDAQ:TSLA), Shopify (NYSE:SHOP), and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) have all stated intentions to split their stocks. The aim is to make the shares of each company more accessible for retail investors, who typically have less money to invest in the market.

However, if we had to invest in one company in 2022, there is one we would declare is the best split stock to buy now.

Splits don’t add value

Stock splits are simply for show and do not affect a firm’s fundamentals. They don’t make any company more valuable, but splits can lead to an inflow of cash. There is some evidence supporting this idea.

The stock price of Alphabet is $2,534. Amazon has a stock price of $3,043. According to conventional thinking, smaller investors avoid investing in these firms because they can’t afford to own a complete share without taking up a significant amount of money in their portfolios.

Split stock to buy now

It’s easier for retail investors to acquire Amazon stock if the price per share is lower. As a result of this, Amazon’s 20-for-1 stock split, for example, would reduce its stock price to $152 per share.  Thus making the stock more accessible for retail investors. The idea is that more significant money will flow into Amazon stock due to the plan, increasing its overall value. That perception resulted in Shopify, Amazon, Alphabet, and Tesla seeing their stocks rise on the day they revealed their plans to split.

A stock split, on its own, isn’t a compelling reason to purchase. However,  it’s still important for investors to consider each firm’s advantages. And, for us, one of these businesses towers above the rest.

Explore the Amazon

Although Amazon is the world’s largest e-commerce firm, it has also evolved into one of the most diversified. For example, it has a dominant cloud computing platform in Amazon Web Services (AWS) and a top streaming service in Amazon Prime. Furthermore, it has an entry into the electric vehicle (EV) industry through its investment in Rivian Automotive (NASDAQ:RIVN), and finally, a thriving advertising business that is outdoing all others.

Cloudy with a chance of profits

AWS is one of the most important reasons to invest in Amazon stock. Despite contributing just 13% of the company’s $469 billion in revenue in 2021, it was responsible for 74% of its overall operating income. While e-commerce is essential to Amazon’s worldwide presence, AWS underpins the financials and thus supports investments into new areas. Not to mention, it’s the number 1 cloud platform in the world. Moreover, the cloud market projects to grow at a compound annual growth rate of 33 percent through 2030.

Advertising boom

Amazon’s newest category is advertising, where the company claims it generated $31 billion in sales in 2021. As a result, Amazon’s advertising business is 14 times larger than Walmart’s (NYSE:WMT) and even exceeds YouTube’s $28 billion revenue in 2021.

Amazon’s other platforms like Amazon Music and high-value content like NFL’s Thursday Night Football proves it is constantly increasing its digital advertising presence. It’s a gap that Walmart and other e-commerce rivals can’t close.

Great beyond the split

Amazon generated $64.81 in earnings per share in 2021, giving its stock a price-to-earnings ratio of 46. That’s above the Nasdaq 100 index, which has a multiple of 31. However,  plenty of factors cause investors to value Amazon over the broader market.

Over the previous five years, revenue has risen at a compound annual rate of 21%. However, earnings per share have grown by an astounding 58% each year over the same period.  Amazon Web Services are increasing to account for a more significant portion of the entire organization.

Growing revenue streams

Amazon’s advertising business may soon be another high-profit-margin source to the company’s bottom line. And, as electric vehicles (EVs) become the dominant share of car sales in the next few decades, Rivian’s investments in the sector may pay off handsomely.

Amazon is difficult to outperform for its growth, diversity, and long-term prospects. That’s why we choose Amazon as the best split stock to buy right now.

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