Investors learned an important lesson in 2023: investing in the biggest companies and their stocks is a surefire way to capture strong gains. The Magnificent 7 – all of which are trillion dollar stocks – produced strong returns for investors.
Therefore, it’s easy to see why investors continue to look for the next trillion dollar companies to buy now. These companies promise to provide similar returns for investors. The names discussed below populate the ranks between the 8th and 18th most valuable firms.
If you have reached the trillion dollar threshold in the past but have since fallen back below that level. The others are in a strong position to pass that level in the future.
Let’s take a look at these juggernaut companies in order to understand why investors should buy now.
Eli Lilly (LLY)
Wall Street continues to ask whether Eli Lilly (NYSE:LLY) stock has the ability to reach a valuation of $1 trillion. Morgan Stanley is among the firms that remain bullish in answering that question.
Analysts there recently raised their target price from $805 to $945. Should LLY shares reach $945 that still would put its valuation short of $1 trillion. Prices would have to reach just above $1,050 in order for Eli Lilly to become the first pharmaceutical stock valued at that level.
The obvious question then becomes why should investors believe that will be the case? The obvious answer is that Eli Lilly is at the forefront of a new era of drug making.
There is a huge market for FDA approved weight loss therapeutics. Eli Lilly has a winner in Zepbound. It received FDA approval for weight loss in November. Demand for the drug – which shares the same active ingredient as Mounjaro – is sky high. Mounjaro did more than $5 billion in sales in 2023 with an FDA indication for treating diabetes. Patients were demanding the drug for its ability to induce weight loss so when the FDA approved Zepbound for that indication Eli Lilly’s prospects brightened further. Sales reached $176 million in the fourth quarter, its first with FDA approval. analysts believe sales will be particularly strong given that Zepbound is indicated to reduce heart disease risks as well. That should make it easier for the drug to receive insurance approval.
Berkshire Hathaway (BRK.B)
Berkshire Hathaway (NYSE:BRK.B) is already a juggernaut by most standards. The stock is associated with Warren Buffett, arguably the most famous investor ever. Yet, at the same time, it has not reached the level of the Magnificent 7, all of which are valued at more than $1 trillion.
However, when investors take a look at its history it is very clear to see that it is on a trajectory to pass that level in the future.
Warren Buffett’s firm is well known for its strategy of investing in Blue Chip American companies. The core of the company’s portfolio still consists of plays such as Coca-Cola (NYSE:KO) primarily. Yet, a shift has emerged. The company is now investing more heavily in growth plays and lesser known names. That means it is increasingly invested in companies like Snowflake (NASDAQ:SNOW) that poise the company for more growth.
The company is also highly invested in Apple (NASDAQ:AAPL) which makes up more than 50% of its overall holdings.
Tesla (TSLA)
It’s fair to assert that Tesla (NASDAQ:TSLA) has the best chance among the stocks listed in this article of reaching $1 trillion first. The company has been a trillion dollar firm in the past but current troubles plaguing the EV industry have slashed its valuation well below that level at present.
Analysts have pinpointed the reason for the decline to earnings projections. Wall Street continues to lower its earnings expectations for Tesla throughout 2024. The percentage by which their estimates have fallen correlates highly to the percentage by which Tesla’s shares have fallen over that time frame.
While it’s difficult to argue with the numbers and the logic, I think there is something even simpler at play: Tesla doesn’t necessarily need Wall Street to come out and say that it has suddenly become positive about earnings for the shares to rebound.
Instead, the company simply needs Elon Musk to show signs of his dedication to Tesla above all else. Should he do that and focus less on AI robots or X that might be just the spark that shares need.
Taiwan Semiconductor Manufacturing (TSM)
A big part of the reason to believe in Taiwan Semiconductor Manufacturing (NYSE:TSM) stock is its bullish expectations for the year. The company is already on record announcing that it expects 2024 to be a big year for growth, and a big reason to believe in that growth is the continued growth of Nvidia (NASDAQ:NVDA).
The leading AI chip firm again bested expectations with its 4th quarter earnings report. Both earnings and revenue figures were well above levels that Wall Street had been expecting. Yet, as promising as that sounds, it raises a question: can Nvidia continue to keep up with demand for its high priced processors that are strongly preferred for all things artificial intelligence?
If the answer is yes, then Taiwan Semiconductor Manufacturing has even further to grow in 2024. Nvidia relies on TSMC for chip production and packaging. So, it is an integral part of Nvidia’s ability to quiet critics who believe that it may not be able to keep up with demand in 2024. Bullish investors should ignore the noise and buy TSM stock as a direct indication of their confidence in both the firm and Nvidia.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) stock has doubled in the past 12 months. That puts it more than halfway on the path to a $1 trillion valuation. It clearly has a way to go before it can legitimately be considered a real threat to reach that level.
While it will take time for Broadcom to realistically reach a $1 trillion valuation, it is worth investing in at the moment. For one, the company recently became more deeply entwined in the artificial intelligence race. CEO Hock Tan was recently added to the board of Meta Platforms (NASDAQ:META).
The move deepens the already strong relationship between Meta and Broadcom. Meta is attempting to distance itself from Nvidia as a supplier and strengthen its collaborative efforts with firms like Broadcom in order to reduce costs. That should increase Broadcom’s sales from Meta in the future. Meta spent $500 million on service revenues with Broadcom last year.
So, while Broadcom has a long road ahead to reach $1 trillion, its relationship with Meta promises to speed up that trajectory.
Novo Nordisk (NVO)
Novo Nordisk (NYSE:NVO) is the other pharmaceutical industry firm contending for its place as the first trillion dollar drug maker stock. It is very similar to Eli Lilly in both that regard and its drug portfolio.
Both firms have now FDA approved weight loss drugs that first received FDA approval as diabetes drugs. Novo Nordisk’s weight loss drug is branded under the trade name Wegovy. The weight loss drug is given as an injection but the company also plans to sell it in pill form.
That should spike sales as the option of an orally taken pill is much more palatable than an injection. However, this is both a problem and an opportunity for Novo Nordisk. The company needs to increase manufacturing in order to meet the potential demand. The oral version of the drug requires more of the active ingredient than does the injectable form. Novo Nordisk will need to address its ability to manufacture the active ingredient at greater volumes in order to take advantage of the huge opportunity before it.
The company has agreed to pay $11 billion for three factories in connection with its acquisition of Catalent. That news alone should give bulls all the confidence they need that Novo Nordisk can meet manufacturing demand for its drug.
LVMH (LVMUY)
Investors who believe the oft repeated refrain that the rich are getting richer should consider buying LVMH (OTCMKTS:LVMUY) stock. In fact, it’s very easy to find sources to substantiate that opinion. This article and this one both suggest that the rich are indeed getting richer.
As people get richer they tend to buy greater volumes of the luxury goods that LVMH sells. The company, which is the largest luxury group globally, reported sales of 86.2 billion euros in 2023. That represented growth of 13% top line for the company and was a record year for the firm.
LVMH is currently valued at approximately $450 billion. It has a long road ahead of to reach $1 trillion. Regardless, the company also has an incredibly diverse portfolio of luxury products and brands overall. Whether it’s jewelry, fashion, watches, expensive alcohol, or upscale retail shops, LVMH owns assets in those areas. That broad exposure to the world’s top luxury brands gives the company a scale that will allow it to continue to grow and head toward $1 trillion in valuation.
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.
