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Four-comma club: Predicting the next company to join trillion-dollar value elite

NEW YORK: The trillion-dollar market cap club expanded last week to a third U.S. company, with Google parent Alphabet Inc topping the lofty valuation mark. Adding the next member, however, is likely to take a while.

Apple Inc and Microsoft Corp are also worth more than US$1 trillion on the stock market. And while Amazon.com Inc is currently worth around US$935 billion, the e-commerce leader did cross the trillion-dollar threshold briefly in September 2018.

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The next closest company is not within US$300 billion of the mark, but a handful companies could contend based on their current values.

Social media platform Facebook Inc appears to have the pole position. Its US$630 billion market value is about US$65 billion more than Berkshire Hathaway Inc , the next richest company in the S&P 500 .

But a lot can happen between now and US$1 trillion, and investors asked to handicap the field revealed different choices among the S&P 500 for which U.S. company will be the fifth member of the elite club. The next to join also may not yet be on anyone's list.

The following are among the top contenders to crack the US$1 trillion market valuation mark:

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FACEBOOK (Current market cap: US$627 billion)

The social media company's stock price soared about 50per cent in the past year, and while past performance is no predictor, Facebook would top US$1 trillion in just over a year if it keeps up that pace.

To get there, Facebook "must demonstrate the ability to monetize its user base beyond just selling ads," King Lip, chief strategist at Baker Avenue Wealth Management, said in an email.

Greater scrutiny of tech companies over privacy and data policies could limit Facebook's growth and stock valuation, according to investors.

Facebook is poised for above-market growth, said Margaret Reid, senior portfolio manager at The Private Bank at Union Bank. But "that trillion dollar market cap might be further out the spectrum because of the regulatory environment for these technology platform companies," she added.

BERKSHIRE HATHAWAY (US$561 billion)

Shares of Warren Buffett's conglomerate climbed more slowly than the broader market over the past few years, with its Class A shares up 11 per cent in 2019 against a gain of nearly 29 per cent for the S&P 500.

Berkshire's "growth rate is less exciting, their valuation less likely to expand meaningfully," according to emailed comments from Jason Ware, chief investment officer with Albion Financial Group, who called the diversified company's earnings power and economic competitive advantages "airtight."

"They'll likely hit US$1 trillion eventually, but they are the tortoise in this story."

VISA (US$446 billion)

Soaring stock prices have propelled Visa Inc and rival payments processing company Mastercard Inc up the market cap chart.

Both could surpass Facebook in marketRead More – Source

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