Unsurprisingly, Microsoft (NASDAQ:MSFT) continues to soar higher and boasts a market cap above $3 trillion. The tech giant’s ascent has inspired many investors to pursue stocks that can someday reach the $1 trillion milestone.
Finding long-term investments and letting time take its course can be a winning strategy. However, you have to pick the right assets that have a shot at crossing $1 trillion market caps. Investors looking for those types of opportunities may want to consider these three picks.
Walmart (WMT)
Walmart (NYSE:WMT) is a reliable retailer that consumers trust when they need quality goods at lower prices. Since people will always want to save money, Walmart has been in a position to dominate its industry and distribute cash flow to investors for many years.
Shares have steadily increased by 20% over the past year and are up by 77% over the past five years. The company’s Q3 FY24 results suggest the company can maintain its momentum.
During that quarter, revenue increased by 5,2% year over year (YOY) while net income more than doubled YOY. Also, the company is generating plenty of headlines due to its stock split announcement.
These splits don’t increase value but do bring a lot of attention. Investors may rush to accumulate shares before the split and may feel inclined to purchase more shares since it will be easier to reach a certain quantity of shares. While this doesn’t make sense from a valuation standpoint, human psychology can push an investor to buy 100 post-split shares rather than stock at holding 30 pre-split shares (you end up with 90 shares after the split).
Furthermore, Walmart has more going for it than a stock split. E-commerce sales were up double-digits YOY, and the company’s advertising division did even better. These two segments can help Walmart unlock more value for shareholders.
Visa (V)
Visa (NYSE:V) has been around for over 60 years with a dominant position in the credit and debit card industry. The corporation has a market cap of over $500 billion and can realistically join the trillion-dollar club within a few years.
Visa stock has gained 20% over the past year and is up by 96% over the past five years. The equity trades at a 32 P/E ratio and offers a 0.75% dividend yield. Also, the company has initiated several share buybacks to boost shareholder value.
Additionally, the company puts its capital to good use with acquisitions to increase its growth rates. Visa recently completed its acquisition of Pismo, a global cloud-native issue processing and core banking platform.
Headquartered in Brazil, Pismo will strengthen Visa’s exposure to international markets. The company already has a large presence in those markets. But, international markets tend to offer better growth opportunities than domestic markets once corporations become large caps.
Adobe (ADBE)
Adobe (NASDAQ:ADBE) generates recurring revenue from its software subscriptions. Currently, the company’s Digital Media annual recurring revenue is $15.17 billion. This vast recurring revenue stream helped the company increase its revenue by 12% YOY in Q4 FY23.
Also, revenue growth rate is an acceleration since the company achieved 10% YOY revenue growth in fiscal 2023. Adobe projects to generate $21.30 billion to $21.50 billion in fiscal 2024. The midpoint represents 10.3% YOY revenue growth.
Additionally, diluted GAAP earnings per share is projected to grow at a good clip. The company’s midpoint GAAP EPS target is $13.65 which would be a 15.5% YOY growth rate compared to the diluted GAAP EPS in 2023.
Furthermore, ADBE stock is up by 66% over the past year and has gained 141% over the past five years. Adobe continues to reward shareholders and bought back 11.5 million shares. Continued buybacks and financial growth can help the stock move higher.
On the date of publication, Marc Guberti 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.
