The $299 billion investment portfolio Warren Buffett oversees at Berkshire Hathaway may house three prominent stock splits in the new year.
Over the last two years, artificial intelligence (AI) has been the hottest thing since sliced bread on Wall Street. The virtually limitless ceiling that AI offers has professional and retail investors salivating. However, AI isn’t the only catalyst that’s been sending the broader market higher. In 2024, excitement surrounding stock splits has played an undeniably important role.
A stock split is a tool publicly traded companies have available that gives them the ability to alter their share price and outstanding share count by the same factor. These changes are entirely cosmetic in the sense that they don’t affect a company’s market cap or its operating performance.
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Since 2024 began, more than a dozen high-profile companies have completed stock splits, the latest of which is cybersecurity colossus Palo Alto Networks. More than likely, we’ll witness this stock-split euphoria continue into the new year.
What might come as a surprise is that Wall Street’s next stock-split stocks may come from Warren Buffett’s $299 billion portfolio at Berkshire Hathaway (BRK.A 0.38%) (BRK.B 0.62%). Among the more than three dozen stocks the Oracle of Omaha currently oversees, three appear ripe for a split in 2025.
Domino’s Pizza
The first unstoppable stock in Buffett’s portfolio that might announce a forward split in 2025 is fast-food restaurant chain Domino’s Pizza (DPZ -0.71%). Despite Domino’s stock advancing by close to 7,200% since its initial public offering (IPO) in July 2004, including dividends paid, the company’s board has never authorized a split. But with shares of the company hovering in the mid-$400s, the impetus for a split is there.
Domino’s success ties back to operational changes the company made roughly 15 years ago. In 2009, management kicked off a mea culpa-styled advertising campaign where the company admitted that its pizza wasn’t very good and that it had missed the mark with consumers. While not all mea culpa marketing campaigns are successful, few have earned consumers’ trust or a second chance quite like Domino’s Pizza.
Additionally, Domino’s has relied on various forms of innovation to drive growth. The company’s current five-year plan, dubbed “Hungry for MORE,” relies on technology to improve its supply chain, as well as leans on new service programs to expedite order times and keep production quality consistent.
Another reason Domino’s has shone brightly is because of its international appeal. According to CEO Russell Weiner, “In our international business, we are on track for our 31st consecutive year of same store sales growth.” The strength of the Domino’s brand, coupled with the changes the company has made to improve its production process, are clearly resonating with consumers around the globe.
Long story short, it’s no accident that Domino’s Pizza stock is up nearly 7,200% since its IPO, and it looks to be just a matter of time before the company’s board slices up its shares via a stock split.
Image source: American Express.
American Express
A second sensational Warren Buffett stock that can become one of Wall Street’s most-prominent stock-split stocks of 2025 is credit-services provider American Express (AXP 1.84%). “AmEx,” as American Express is more commonly known, is Berkshire Hathaway’s second longest-held stock — since 1991.
The last time AmEx conducted a forward split was in 2000. Although being able to purchase fractional shares at some online brokerages has minimized the need for stock splits since this century began, American Express’s shares topping $300 for the first time ever may compel its board to act and declare a split in the new year.
One reason American Express continues to dazzle Wall Street and investors is because time is on its side. Even though recessions are an inevitable aspect of the economic cycle, downturns in the U.S. economy are historically short-lived. While nine out of 12 U.S. recessions since the end of World War II resolved in less than a year, most periods of economic expansion have stuck around for multiple years.
Beyond macro factors, AmEx benefits from being able to tap both sides of the transaction aisle. In the U.S., it’s the No. 3 payment processor by credit card network purchase volume. This means it’s generating predictable fees from merchants when processing payments. But it’s also a lender that’s bringing in annual fees and interest income from its cardholders. When the U.S. and global economy are expanding, AmEx is well-positioned for success.
Furthermore, American Express has a knack for attracting high-earning cardholders. Compared to average earners, high earners are less likely to alter their spending habits or fail to pay their bills during minor economic disruptions.
Mastercard
The third unstoppable Warren Buffett stock that could be one of the most-talked-about stock-split stocks of 2025 is none other than payment-processing goliath Mastercard (MA 0.64%).
Mastercard has completed only one forward split (10-for-1) since going public in May 2006. However, when Mastercard completed this split in January 2014, its shares were trading north of $700. With its shares now well above $500, the table is set for the company’s board to act, once again.
Similar to American Express, Mastercard benefits immensely from the nonlinearity of the economic cycle. Even though recessions lead to periods of reduced spending that typically prove challenging for the company, substantially longer economic expansions ensure that consumer and corporate spending steadily rise over time.
Where Mastercard, the nation’s No. 2 payment processor, differs from the likes of American Express is in the lending aspect. Unlike AmEx, Mastercard’s management team is strictly focused on payment facilitation and doesn’t lend. The advantage of this approach is that Mastercard doesn’t have to set aside capital to cover loan losses or potential delinquencies. In short, it’s able to bounce back from economic downturns considerably faster than most financial stocks.
Mastercard’s nearly 12,500% total return (including dividends) since its 2006 IPO is also a reflection of the enormous international opportunity that lies ahead. Most emerging markets remain chronically underbanked, which paves the way for Mastercard to organically or acquisitively enter these countries. With cross-border payment volume consistently growing by a double-digit percentage year after year, Mastercard has a clear path to sustained double-digit earnings growth.
American Express is an advertising partner of Motley Fool Money. Sean Williams has positions in Mastercard. The Motley Fool has positions in and recommends Berkshire Hathaway, Domino’s Pizza, and Mastercard. The Motley Fool recommends Palo Alto Networks and recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.
