Large-cap stocks refer to shares of companies with market capitalizations in excess of $10 billion. Alternatively known as big-cap stocks they offer stability and safety relative to their smaller counterparts. Large-cap firms often tend to be top-rated stocks simply because they are so large that they are unlikely to fail. While that size is an advantage, it also means that quick growth is more difficult.
If an investor buys and holds a stock forever then that asset must be passed on at some point. That’s the point of these shares which should grow for a long time and can be transferred to future generations.
Alphabet (GOOG,GOOGL)
Alphabet (NASDAQ:GOOG,GOOGL) is exactly the kind of company that can continue to grow indefinitely. Currently, it carries a market cap of $1.46 trillion making it one of the most valuable firms globally.
The reason to believe Alphabet possesses unlimited upside lies in its strategy. Currently, that strategy focuses on leveraging Google to help the holding company thrive. Search, YouTube, ads, and Cloud are the current ‘Alpha’ bets for the firm. They are driving sales and profitability.
But over time, the firms ‘other’ Bets could materialize into more meaningful contributors to overall results. Those other subsidiaries include a broad variety of firms in everything from life sciences to autonomous driving, to drones, secret R&D, and more. Perhaps most important in the current scheme of things is DeepMind AI research laboratory.
AI has become a reality in 2023 and it is driving investment with companies like Nvidia (NASDAQ:NVDA) exhibiting explosive growth. Alphabet was slower to arrive, but is nearly certain to make a big impact sooner or later. DeepMind or any of its other subsidiaries give Alphabet huge future options. That assumes that Google isn’t strong enough to continue to dominate as it currently is which is a silly thought.
Alibaba (BABA)
Alibaba (NYSE:BABA) is often compared with Amazon (NASDAQ:AMZN), but I’d give the nod to BABA stock in the long run. China’s e-commerce market is simply bigger and growing increasingly fast.
In 2023, e-commerce sales in China are expected to reach $1.487 trillion. U.S. e-commerce revenues are expected to reach $1.011 trillion during the same period. That gap is only expected to grow with China’s e-commerce expected to be worth $2.375 trillion by 2027. U.S. e-commerce is expected to have grown in value to $1.56 trillion by then. You get it: China is huge and e-commerce is important there.
Meanwhile, Alibaba looks increasingly likely to spin off its Cloud and artificial intelligence business into a separate entity that will be taken public. That’s the reasoning behind job cuts currently being undertaken to maximize value in that business arm prior to an IPO. That means BABA shares won’t benefit from those business lines moving forward. One could argue that Alibaba will be less attractive for it, but I’d argue the opposite: dominance in China’s e-commerce sector is more than enough.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) stock has been a long-time provider of value for investors. It is an incredibly stable company overall as investors have seen during recent volatility. It has again proven to be a great preserver of capital.
Expectations are that it will continue to be an excellent investment for those looking not only to preserve but also to grow their capital. Prognostications are guesses to be sure but these suggest it could grow quickly in the coming years. KO stock has proven to be a strong investment over the past decade and doubled money parked in it during that time.
Coca-Cola’s revenues have grown relatively quickly in recent years, which is yet more reason to believe in the firm. Its products are household names and the company is highly profitable. Lastly, KO stock includes one of the most stable dividends among any firm. It hasn’t been reduced since 1963 and it only serves to make investing in KO stock that much better a deal.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
