2 Stock Splits Stocks To Buy in April

The stock market’s implosion over the past few days in response to President Trump’s sweeping tariffs on U.S. trading partners has been a wake-up call for many investors. 

Although the market has been a bit of a roller coaster ride since the pandemic, the unprecedented drop by the Dow Jones Industrial Average of more than 1,500 points for two consecutive days served notice this could be a completely different market than what was previously experienced.

It is a dramatic reset in stock valuations that could take many high-fliers months, maybe years to recover. Because they were priced for perfection, there still might be a lot of air under their market valuations before they begin to rebound.

Over the past few years, stock splits were an increasingly common means for keeping prices within reach of retail investors, especially amongst tech stocks. It was an optimistic outlook by management that their business would keep growing, which caused investors to flock to stocks that split, driving their prices higher once more.

Of course, stock splits are meaningless on paper. The fundamentals of the company don’t change as the underlying revenue, profits, and debt remain unmoved. Yet because investors love them, companies keep splitting their shares. And the market reset that just occurred, suggests we won’t see many companies divvying up their shares for the immediate future. 

The two stock-split stocks below, however, are ones you should be buying in April.

O’Reilly Automotive (ORLY)

While a lot can happen in the next two months to change things, auto parts retailer O’Reilly Automotive (NASDAQ:ORLY) is scheduled to split its stock 15-for-1 on June 10. ORLY stock is currently trading at $1,390 per share, meaning a split will bring shares down to around $92 a stub.

O’Reilly has been largely unaffected by the brewing trade war. Although shares fell by 3.6% last Friday, the stock is down just 1% over the past week because the auto parts business should fare better than most due to tariffs raising the cost of imported vehicles. Higher car prices will induce car owners to keep their cars longer and repair them. It may face higher costs itself for auto parts, but the tariffs on them are delayed until May 3 and those that are compliant with the U.S.-Mexico-Canada trade agreement will stay duty-free.

With over 6,000 stores across the U.S., O’Reilly Automotive serves both the DIY customer and professional mechanics and is the second-largest auto parts retailer behind AutoZone (NYSE:AZO). Because it helps customers diagnose problems and order parts, even going so far as to loan tools to customers to install them, it has developed a loyal customer base. O’Reilly has over a decade of comparable store sales annual growth.

ORLY stock is not offered at a discount. It trades at 34 times earnings, almost 5 times sales, and 39x the free cash flow it generates, all higher than AutoZone or Advance Auto Parts (NYSE:AAP). But it has performed better than its rivals too, and investors will likely be willing to pay a premium for a stock that can navigate through the trade storm.

Tractor Supply (TSCO)

Tractor Supply (NASDAQ:TSCO) split its stock in December, dividing up its shares at a 5-for-1 ratio. TSCO currently goes for around $52 per share, but like O’Reilly Automotive, it has withstood the worst of the tariff barrage so far, and with good reason.

The retailer is the largest consumer farm specialty retailer in the U.S. with nearly $15 billion in annual sales. And as we saw during the pandemic, people flock to a more self-sufficient lifestyle when confronted with extreme adversity. If inflation is reignited because of the trade war, causing food prices in particular to rise, we’re likely to see an increase in a return to basics approach by consumers. That means growing more of their own food, raising backyard chickens, and needing the equipment to care for all of it.

Tractor Supply has increased its retail footprint by about 24% over the past five years, hitting over 2,500 locations by the end of last year. It continues to expand into the western part of the U.S. and is likely to increase its store count by 33% over the next decade.

The rural lifestyle leader doesn’t completely escape the impact of tariffs, but only 10% to 15% of its inventory is imported (mostly from China), meaning that 85% to 90% of its products won’t be affected. There are indirect costs, too, such as tariffs on aluminum and steel, which could raise prices for the equipment it sells, but its scale and adaptability make it less vulnerable than pure manufacturers.

The tailwinds behind Tractor Supply outweigh the headwinds, and coupled with a dividend yielding 1.7% that it has raised for 16 consecutive years, it makes TSCO stock the second stock-split stock to buy in April.

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