Here's the Hands-Down Best Stock-Split Stock to Buy in August Despite the Market Sell-Off

We've had some major stock splits so far in 2024. Chipotle Mexican Grill conducted a 50-for-1 split. Nvidia had a 10-for-1 stock split. Walmart split its shares 3-for-1. And there have been more with others on the way.

Some investors might be leery of buying any stock right now whether it's conducted a split or not. The major indexes have fallen sharply on worries about a potential recession and the Bank of Japan's interest rate hike .

However, I think the pullback presents a great opportunity for forward-thinking investors. Here's the hands-down best stock-split stock to buy in August despite the market sell-off.

Two-factor authentication

I won't keep you in suspense. My pick for the best stock-split stock to buy this month is... Broadcom (NASDAQ: AVGO) . Why Broadcom? I think two factors especially stand out. But they have nothing to do with the semiconductor maker's 10-for-1 stock split conducted in July.

The first factor behind my choice of Broadcom is its growth prospects. Broadcom's revenue soared 43% year over year in the second quarter of 2024, fueled by the demand for its artificial intelligence (AI) solutions and the company's acquisition of VMware. I expect AI and VMware will remain key growth drivers going forward.

Nobody handles networking AI accelerators better than Broadcom. It's not surprising that seven of the eight largest AI superclusters in the world rely on the company's networking technology. Broadcom projects that its AI networking revenue growth will accelerate.

Since closing the acquisition of VMware, Broadcom has signed up around 3,000 of its 10,000 biggest customers to build an on-premises self-service virtual private cloud. Most of these are multi-year contracts, so the revenue will flow for a long time to come. Broadcom will no doubt focus on getting more of these large customers on board with VMware as well.

The second factor that's key to my case for Broadcom is valuation. Broadcom's shares trade at 23.9 times forward earnings. That multiple is relatively low for a premiere AI stock. The stock's valuation looks even more attractive with growth projections included. Its price-to-earnings-to-growth (PEG) ratio with five-year growth projections is only 1.06, according to LSEG .

Wall Street is also bullish about Broadcom's prospects

I'm not alone in my optimism about Broadcom. Wall Street is bullish about the stock, too.

Of the 29 analysts surveyed by LSEG in August who cover Broadcom, 10 rate the stock as a "strong buy." Another 17 analysts recommend it as a "buy." The remaining two analysts rate Broadcom as a "hold."

The average 12-month price target for Broadcom is more than 36% above the current share price. The most pessimistic analyst surveyed by LSEG thinks the stock can rise 9%.

Sure, many Wall Street analysts are also bullish about Nvidia, Chipotle, and Walmart. However, analysts' price targets for these other stock-split stocks don't reflect as much upside potential as the average price target for Broadcom does.

Short term vs. long term

Broadcom's share price is down more than 20% below its high set in June. It's possible that the macroeconomic concerns weighing on the broader stock market could hold Broadcom back too over the short term.

However, I think the long-term prospects for Broadcom look bright. The current sell-off offers an opportunity to buy a great stock on sale.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Nvidia, and Walmart. The Motley Fool recommends Broadcom and recommends the following options: short September 2024 $52 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy .