Smart investors are drawn to stock splits, not only because they make a company's share price cheaper, but also because they tend to precede market-beating returns. Stocks that split have historically outperformed the S&P 500 (SNPINDEX: ^GSPC) by 13 percentage points during the year after the stock-split announcement.
Over the last three years, Meta Platforms (NASDAQ: META) and CrowdStrike (NASDAQ: CRWD) have returned 255% and 185%, respectively. Both companies are split candidates after that price appreciation, and both stocks are worth buying today, according to certain Wall Street analysts.
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Here's what investors should know about Meta Platforms and CrowdStrike.
Image source: Getty Images.
Meta Platforms owns four of the seven most popular social media platforms, a key competitive advantage that lets it source consumer data and help brands target advertising campaigns. Consequently, Meta is the second-largest adtech company in the world, behind Alphabet's Google, and eMarketer expects the company to continue gaining market share through 2026.
Meta Platform reported solid first-quarter financial results, crushing estimates on the top and bottom lines. Revenue increased 16% to $42.3 billion, operating margin expanded 3 percentage points, and generally accepted accounting principles (GAAP) net income increased 37% to $6.43 per diluted share. Also, CEO Mark Zuckerberg told analysts the company is making "good progress" on artificial intelligence (AI) glasses and Meta AI, a conversational assistant with more than 1 billion monthly active users.
Looking ahead, Meta hopes to automate the entire ad creation process with artificial intelligence (AI) by 2026. According to a recent report from The Wall Street Journal, "Using the ad tools Meta is developing, a brand could present an image of the product it wants to promote along with a budgetary goal, and AI would create the entire ad, including imagery, video, and text."
Innovation thinking should keep Meta on the leading edge of the adtech market, where spending is projected to increase at 14% annually through 2030. In turn, Wall Street expects Meta's earnings to increase at 18% annually over the next three years. That makes the current valuation of 27 times earnings look reasonable. Patient investors should feel comfortable buying a position in this stock today.
CrowdStrike is a cybersecurity company best known for leadership in endpoint protection, a discipline that secures devices like servers, desktops, and laptops. But its platform comprises 30 modules that address multiple major markets, and the company is taking share in several, including cloud security, identity threat detection, attack surface management, and managed detection and response.
CrowdStrike reported mixed financial results in the first quarter of fiscal 2026, which ended in April. Revenue rose 20% to $1.1 billion, supported by high retention rates despite the widespread outage last year. But non-GAAP net income fell 8% to $0.73 per diluted share as the company ramped spending on go-to-market capabilities and automation. "We expect these investments to fuel our growth in the back half of fiscal year 2026 and beyond," CFO Burt Podbere told analysts.
Looking ahead, CrowdStrike has several important tailwinds at its back. As the market leader in managed detection and response, a service that lets companies outsource their cybersecurity needs to trained professionals, the company should benefit from the massive labor shortage that currently plagues the industry.
Additionally, CrowdStrike's platform strategy -- its unification of multiple cybersecurity software products on a single platform -- positions the company as a long-term winner as organizations look to eliminate complexity by consolidating through a single vendor. In total, the company values its addressable market at $250 billion by 2029.
Wall Street estimates CrowdStrike's adjusted earnings will grow at 13% annually through fiscal 2027, which ends in January 2027. That makes the present valuation of 124 times earnings look expensive. Admittedly, CrowdStrike beat the consensus estimate by an average of 12% in the last six quarters, but the stock would be expensive even if that trend continues.
Personally, rather than chasing CrowdStrike at its current price, I think investors should keep the stock on their watch lists right now. I expect the company to be worth far more in the future, but I also suspect the expensive valuation will create dip-buying opportunities in the near term, especially due to macroeconomic uncertainty surrounding tariffs.
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Wells Fargo is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in CrowdStrike. The Motley Fool has positions in and recommends Alphabet, CrowdStrike, and Meta Platforms. The Motley Fool has a disclosure policy.