The Next Three Stocks to Reach a $1 Trillion Valuation

In the last three decades, we seem to have left behind the notion of governments curtailing corporate power. Instead, similar to the Chinese model, large conglomerates are emerging as representatives and shapers of each economic sector. Your investment choices should align with this reality.

Three Stocks with a Future Market Cap of $1 Trillion

If the aftermath of the governments’ reaction to COVID-19, one thing is becoming acutely clear. We are accelerating toward an age of global conglomerates of immense cultural, political, and economic power. Few in number, these corporate entities will shape our living and virtual spaces:

• Walmart’s profit is up by 80%
• Lowe’s profit has increased by 74%
• Target’s profit has seen an 80% boost
• Amazon, Apple, Alphabet (Google), Microsoft are breaking all records with above $1 trillion market caps

At the same time, 21% of small businesses have permanently shut down. For the rest, the future is precarious as their revenue falls by 30%.

According to the latest poll by the US Chamber of Commerce, 58% of small businesses worry they will have to permanently remove their economic footprint. All of this tells us that we need to shift our perspective on how our economy works.

The long-standing entrepreneurial sentiment of “pull yourself up by the bootstraps” is vanishing out of our rear-view mirror. If this continues, and there is no reason to believe otherwise, your long-term investment for the decade will be governed by the law of compound growth.

In particular, Walt Disney, Mastercard, and Adobe all feature stocks that will likely surpass the $1 trillion valuation threshold in the next 10 years.

Walt Disney (NASDAQ:DIS)

At this point, it would be easier to count mediatic entities not bought by Disney. Originally spawned as a family-oriented animated feature film studio, today’s Walt Disney has spread into sports (ESPN), TV properties (Fox, ABC), and massive film franchises like the Marvel and Star Wars universes.

Moreover, Disney integrates its content via theme parks and merchandise, in order to achieve maximum extraction results. The coronavirus pandemic has curtailed Disney’s operations, manifested in a 42% sales reduction up until June.

Still, just Disney’s House of Mouse series managed to generate an operating income of $1.1 billion. This is a testament to Disney’s household brand.

Not relying on just post-corona recovery, Disney is already well-poised to dish out content if every single movie theater were to be closed forever.

Disney offers multiple streaming services: Hulu, ESPN+, Disney+, and Disney+ Hotstar for the Indian region, accounting for over 100 million subscribers alone. Disney+, in particular, has had a big impact on Disney’s stock recovery.

Drawing from a wealth of trademarked franchises, absorbing everything in sight, and adapting to the virtual age, Disney is an entertainment juggernaut that is highly likely to continue to grow in the coming decade.

Mastercard (NASDAQ:MA)

In the financial world, Mastercard and Visa mirror the duopoly of AMD and Intel in the CPU world. Dominating the global payment processing, all businesses are in some way dependent on Mastercard or Visa. Of the world’s electronic payment volume, Mastercard processes a third of it, not including walled-off China.

However, even that wall broke down with the People’s Bank of China approving Mastercard to enter the Chinese market in 2020. Suffice to say, this will only augment Mastercard’s $16 billion revenue generated in the last year. This revenue comes from the vast number of linked businesses for service fees and switched fees.

Accordingly, given the steady transition from physical to electronic payments, established market dominance, lean operating model (53% operating margin), and deep cash pocket of $11.5 billion, Mastercard is as solid investment as you can hope it to be.

Adobe (NASDAQ:ADBE)

Standing as the synonym for all things related to document creation, and video and photo manipulation, Adobe has come a long way from its humble beginnings in the 1990s. In recent years, Adobe switched to cloud-based subscription services which are highly resistant to piracy.

By offering a full suite of tools for creating digital content and marketing management, Adobe’s revenue increased to $3.13 billion (14%) for Q2 2020. Adobe projects an extra 11% increase for Q3 2020.

This is quite a reasonable projection given the fact that Adobe is effectively recession-proof. More people will turn to digital content consumption and creation, and Adobe holds all the tools to make that happen.

Adobe’s operating margin is not as high as Mastercard but still enviable at 30%. At the current pace of Adobe’s expansion and dominance of the digital content market, a trillion threshold is in its sight.

Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.