Sony Group (NYSE: SONY) has announced plans for a 5-for-1 stock split set to occur on Oct. 1, adding to the list of companies pursuing stock splits in the current market environment. With the S&P 500 index returning an impressive 45% since last January, the surge in equity prices has led to an uptick in stock splits, providing a way for a broader base of investors to buy the stock.
Sony, a Japanese conglomerate with operations in consumer electronics, entertainment, gaming, and more, is in the midst of a turnaround. The company is pursuing a spinoff of its financial services business, deemed non-core, with the transaction expected to be completed in 2025. Despite the potential risks associated with divesting non-core assets, Sony’s management has identified areas that are no longer pertinent to its long-term growth narrative.
One of the key reasons to keep an eye on Sony stock is its potential to benefit from the artificial intelligence (AI) revolution. With businesses in gaming and network services, imaging and sensing solutions, and entertainment, technology, and services, Sony has significant opportunities to leverage AI in its operations. Additionally, the high demand for semiconductor chips in recent years could further benefit Sony as it manufactures devices such as cameras, gaming consoles, and televisions.
Currently, Sony stock trades at a historically low price-to-earnings (P/E) multiple of 16.4, presenting an attractive valuation compared to the S&P 500. While buying a stock around the time of a split can come with risks due to potential volatility, Sony’s split is still a few months away, allowing investors time to monitor the company’s progress. With Sony’s discounted AI potential, ongoing strategies to streamline its organization, and attractive valuation, the stock could be a compelling buy opportunity.
Investors considering Sony Group should weigh the potential risks and rewards before making a decision. The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to buy now, and while Sony Group wasn’t on the list, the recommended stocks have the potential to generate significant returns in the coming years. Ultimately, investors should conduct thorough research and consider their investment goals before investing in Sony Group or any other stock.
