There's arguably no stock on the market that would attract more new investors if it weren't priced so highly than Berkshire Hathaway Class A (BRK.A 0.29%) shares. Its price currently stands close to $471,000.
But don't look for a stock split in this case. Investors already have a much less expensive way to buy the company led by Warren Buffett through Berkshire Hathaway Class B (BRK.B 0.11%) shares.
Buffett isn't a fan of stock splits. However, he is a fan of at least two stocks that have splits on the way. Here are Buffett's favorite stock-split stocks right now.
Image source: The Motley Fool.
Easy choices
There are quite a few well-known companies that will conduct stock splits in the coming months. Google parent Alphabet will do a 20-for-1 stock split in July, and Shopify will conduct a 10-for-1 stock split in June. Tesla has announced plans for a 5-for-1 stock split, but the timing of when it will happen is uncertain.
But Buffett and Berkshire don't own any shares of Alphabet, Shopify, or Tesla. Only two of the companies in Berkshire's portfolio are planning a stock split anytime soon.
Amazon.com (AMZN 1.66%) is scheduled to conduct a 20-for-1 stock split on June 3, 2022. Technically, Buffett didn't buy Amazon for Berkshire's portfolio. He revealed in a 2019 interview with CNBC that "one of the other fellows in the office that manage money" initiated the purchase. However, Buffett added that he's "been a fan" of Amazon for a long time and "was an idiot" for not buying the stock sooner.
RH (RH 5.10%), formerly known as Restoration Hardware, plans to conduct a 3-for-1 stock split soon, although a specific date hasn't been given. The luxury-furniture retailer ranked as one of only seven stocks that Berkshire added to its existing positions in the first quarter of 2022.
Better reasons to like these stocks
You can bet that neither Buffett nor his investment managers are interested in Amazon or RH because of their upcoming stock splits. There are much better reasons to like both stocks.
Amazon remains the undisputed giant of e-commerce. With e-commerce accounting for only 13.2% of total retail sales in the U.S. last year, there's plenty of room for growth in this market.
The company could have a massive opportunity in physical retail, as well. Amazon's "Just Walk Out" technology, which allows customers to buy products without checking out, is already in use in Amazon Fresh and Whole Foods stores. Amazon is now opening up the technology to other retailers.
Cloud computing is Amazon's biggest growth driver right now. The company also continues to expand into new areas, including healthcare and self-driving car technology.
RH is expanding, as well -- both geographically and into adjacent markets. The company is opening new galleries in Europe and is launching RH Guesthouse in New York City, an upscale hotel. It's even experimenting with five-star restaurants in some of its galleries.
Both of these stocks are also more attractively valued than they've been in a while. Amazon's shares are down nearly 40% from their 52-week high.
NASDAQ: AMZN
Key Data Points
RH has taken an even bigger hit. The stock has plunged close to 60% below its peak set last summer.
NYSE: RH
Key Data Points
A few headwinds
These declines reflect a few headwinds for both companies. The overall shift away from growth stocks has hurt Amazon and RH. There are also some unique challenges for each company.
Amazon is currently dealing with excess capacity in its fulfillment and transportation network. The company invested heavily in building additional capacity in 2020 and 2021 due to soaring demand caused by the COVID-19 pandemic. It expects higher costs resulting from its excess capacity will continue for several more quarters.
Runaway inflation and the resulting interest-rate hikes are likely to cool down what has been a sizzling hot housing market. This could negatively impact RH's growth.
However, the long-term opportunities for both Amazon and RH continue to look bright. And whether Buffett cares about them or not, the upcoming stock splits just might provide bumps for both stocks in the near term.
