I Still Like the Trillion-Dollar Stocks
Kiplinger's Personal Finance|September 2021
STREET SMART
James K. Glassman

“It may be a matter of months, or more likely a few years,” I wrote in the September 2017 issue of Kiplinger’s, “but sometime soon a U.S. company will breach the trillion-dollar mark.” By June 2021, to my pleasant surprise, all five companies I highlighted had become trillionaires.

The question now is how high these stocks can go. Big is not beautiful to many regulators and elected officials (of both parties), and President Biden is developing an executive order to rein in businesses that dominate their sectors. The Federal Trade Commission lost an antitrust case against FACEBOOK in June, but the setback merely convinced many in Congress that tougher laws are needed.

Another constraint is a sort of law of financial gravity. It’s not hard to imagine a stock with a market capitalization (stock price times shares outstanding) of about $100 billion becoming what the great mutual fund manager Peter Lynch called a four-bagger—that is, quadrupling in value. That could happen with UBER, SQUARE or Zoom Video Communications. But APPLE? As a four-bagger, it would have a market cap of $9 trillion, roughly the same as the gross domestic products of Germany and Japan combined. Investing in giant companies may considerably limit your upside.

Then again, a few years ago the whole concept of a trillion-dollar stock was alien, even nutty. Now, we have AMAZON.COM, which hit the mark just a year after my 2017 column, and ALPHABET, the parent of Google, which exceeded $1 trillion in January 2020. Facebook hit the milestone in June. Although it has since retreated some (based on data calculated for this column as of July 9), we’re including it in the trillionaires club for now. Plus, there are two stocks whose market caps have breached two trillion dollars: Apple and MICROSOFT.

UNLIKE THE HIGHFLIERS OF THE LATE 1990S, THESE TRILLIONAIRES MAKE TONS OF MONEY.

I’ve now disclosed the punch line to this column in the boldfaced names (as usual, stocks I like are in boldface). I’m doubling down and recommending them all. As for the trustbusters: If the worst happens, and Google is forced to divest YouTube, Facebook has to shed Instagram, or Amazon has to spin off its cloud business, well, so what? As a shareholder, you will get stock in the new stand-alone companies, too.

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