Which of These 5 Companies Will Be First to $1 Trillion in Market Value?

Apple Inc. is one of five popular technology stocks popular with investors primed to hit $1 trillion in market capitalization value.

Morgan Stanley analysts believe that Apple specifically will pass the $1 trillion mark sometime within the next year.

A $1 trillion dollar valuation for a publicly traded U.S. business would be historic. For the sake of comparison, the GDP of Indonesia almost $1 trillion dollars.

As of June 1, 2018, Apple had a valuation of about $935 billion. Financial experts believe that it won’t take long for Apple to hit that number.

Apple’s numerous in-house business moves, borne of capital primarily from iPhone sales, aids its valuation surge, say analysts.

“At this point it starts and ends with the services business,” says Angelo Zino, an analyst at investment research company CFRA.

“As long as the iPhone business can even be maintained at current levels, the free cash flow it generates can be invested in other businesses,” Zino adds.

Apple’s services business grew more than 23% in final quarter of fiscal year 2017. It grew by more than 31% in the second fiscal quarter year of 2018, ending in March.

Katy Huberty, a Morgan Stanley industry analyst, believes that Apple’s services business will grow to 27% by 2022.

Huberty believes that, by that time, the company’s services business will contribute more than 40% of its gross profit.

At the time of this writing, Apple stock shares were trading at about $183 a share.

Apple shares would need to trade at about $197.23 a share for the company to reach the $1 trillion capitalization mark.

FAANG five

Jim Cramer of CNBC fame calls the five companies in the running for $1 trillion valuation the “FAANG five.”

FAANG represents Facebook, Amazon, Apple, Netflix and Google, now known by its parent company Alphabet.

Investors pay attention to FAANG companies because of their outsize influence on the markets.

As of May 2018, stocks from information and technology companies contributed more than 76.5% of S&P 500 returns.

Apple Inc. added more than 21.3% of S&P 500 returns in May alone.

However, most of the FAANG companies, save Apple, have some ways to go to get to $1 trillion.

Netflix has a $150 billion market capitalization valuation, while Facebook stands at $540 billion. Amazon has a market cap of $796.5 billion, while Google stands at $782.9 billion.

Some experts believe however that the $1 trillion valuation mark is just inconsequential hype.

Hitting the mark will not change Apple’s current business practices or demand for its products, the argue.

Even though it would be a milestone, it still makes sense to primarily monitor the revenue and profit growth of a company as an indicator of success.

Apple, for its part, is expected to report 13.8% in revenue growth in the current fiscal year.

Small-cap winners galore

The big stock market winners share one common attribute: Near the beginning of the ascent of their shares, the companies offer revolutionary products or services, are market leaders in their respective industries, or both. Some big stock market winners that possessed the attributes outlined above are Netflix (NFLX), which we recommended to investors in October 2002; Intuitive Surgical (ISRG), which we bought and recommended in July 2004; Baidu.com (BIDU), which we bought and recommended in August 2006; and MercadoLibre (MELI), which we recommended to investors in October 2010. Get up-to-date small-cap stock picks from David Frazier, editor of Small-Cap Profit Confidential.
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