Could one of them be the next trillion-dollar company?
The number of stocks that have exceeded a trillion dollar market capitalization is quite small. In this segment of Backstage pass recorded on January 7, goofy contributors Toby Bordelon, Rachel Warren and Will Healy discuss which stocks they think have a chance of joining this elite club in the years to come.
Toby Bordelon: We talked about large companies. It’s fun to talk about trillion dollar companies. There has been speculation that Berkshire Hathaway maybe next. They had a very good run recently here. They can become the next trillion dollar company, which would be really interesting to see Warren Buffett’s company join this elusive club while he’s still CEO hopefully would be fascinating.
But my question for you guys is to put Berkshire aside because we can’t pick that one. Which company do you think has the best chance of reaching the trillion dollar milestone that isn’t currently a trillion dollar company other than Berkshire?
Let’s start with you, Rachel. What would you say?
Rachel Warren: It was my guess and I don’t know if it will come to fruition, but one company I thought of is Johnson & Johnson (NYSE:JNJ). It is a massive pharmaceutical entity that has been around for over a century.
As I said in the last hour, this is a company that is considering splitting up. Its incredibly profitable pharmaceutical business and its medical device business. Together, these business segments were expected to bring in around $77 billion in 2021.
It will separate them from its consumer health business, which was on track to generate about $15 billion last year. We will publish this full annual report here in a few weeks.
But even as a split company, two separate publicly traded entities, I think these two companies have a lot of room for growth. In the meantime, it could take up to two years for this split to complete.
Could Johnson & Johnson hit a trillion dollars before that? I do not know. Its current market capitalization is based around $458 billion. You would basically have to double down from there, but you never know. I think a company like this is one that more investors are going to look at right now, especially as a lot of your traditional growth stocks are hammered.
I think its stability and the constant demand that its products generate are really huge buying points for this company, so I don’t know. Personally, as an investor, I would be very happy to see [laughs] the stock becomes a trillion dollar company. We will see.
Toby Bordelon: You don’t mind, Rachel, because they’re going to break up next year?
Rachel Warren: I know. Well, I think pharmaceuticals and medical devices would probably be the most likely to hit that market capitalization compared to consumer healthcare. It could be a thing, who knows?
Toby Bordelon: Fair enough. Will, what do you think? Do you have one that is a favorite of yours?
Will Healy: Well I could just say Metaplatforms (NASDAQ:FB) because it crossed a trillion. It’s high, it’s back. I didn’t check today, but I think it’s $9.25 billion or something.
But they are still growing. They’re making ad revenue while the rates are in the double digits, so they’re getting into virtual reality with their Oculus headset. Yeah, that’s gonna be, I think the next one.
Toby Bordelon: I think that’s the one I was watching too, I think it’s kind of because they were actually a trillion before as far as I remember, and then they went down.
I say to myself, I expect them to come back to it very soon. Another one I’m going to throw over there is Nvidia (NASDAQ: NVDA). It currently has a market capitalization of around $700 billion in a very similar game.
They’re a big player I think in the metaverse and all the excitement there is with their hardware. We’ve got some new stuff coming out of it, which is pretty cool, but it’s in a bunch of different markets.
It’s not just computers, it’s self-driving cars. They play a lot in their material. I think that’s the one I think you’re going to see them a trillion dollar business. I do not know when. I guess within the next five years. Take a look at this one.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.