Stocks with game-changing growth potential can grow exponentially in a matter of years, but of the many companies actively pursuing growth today, only a handful appear to be able to weather market fluctuations and achieve capitalization coveted $ 1,000 billion stock market by 2035. After all, only five companies have reached the $ 1,000 billion club so far, so unless one company is already growing like a weed and has compelling catalysts ahead to keep that momentum going, it’s hard to go that far.
Being able to get my hands on a potential trillion dollar company at the start of the game is a dizzyingly tempting idea, so I dug deep into the hundreds of stocks with a market cap of over $ 100 million to see which could go that far. I have found four stocks that have a very good chance of success. Read along.
The COVID-19 pandemic is a boon for this stock
Lots of use Visa (NYSE: V) cards, but few are aware of the kind of growth the business may experience in the years to come.
At Deutsche Bank’s recent tech conference, Visa CFO Vasant Prabhu highlighted four structural trends triggered by the COVID-19 pandemic that are expected to drive the company’s growth:
- Speeding up the digitization of cash, or using digital payment methods instead of cash.
- E-commerce is booming, especially cross-border e-commerce, as people buy things online that they traditionally bought in stores, like groceries and medicines.
- Greater adoption of cashless payment methods by merchants of all sizes as they realize the importance of going online to survive.
- Growth of value-added services such as data solutions, digital security and CyberSource, an e-commerce card payment management company owned by Visa.
Image source: Getty Images.
These are secular trends that Visa knows how to exploit, given its dominance in the payment processing space with 3.6 billion cards issued to its name in the last quarter.
Management has clear plans to increase shareholder wealth: capture growth in consumer payments and value-added markets through acquisitions and new services, pay 20% to 25% of annual earnings per share in the form dividends and buy back shares with the remaining cash. Visa’s attempt to acquire fintech company Plaid may have failed due to regulatory issues, but it’s a great example of Visa’s thirst for growth.
Visa is already a cash machine with a low capital, high margin core business, and it generates operating margins above 60%. With the pandemic forcing economies to go cashless and online, Visa, with its market capitalization of $ 492 billion, is expected to be able to reach $ 1,000 billion well before 2035.
There is more money to be made from this massive trend than you might think
I’m going to make my boldest choice of a $ 1,000 billion claim to date: it’s a utility with a market cap of $ 165 billion.
Yes you read that right, but I firmly believe NextEra Energy (NYSE: NEE) will become the first utility stock in the United States to join the $ 1,000 billion club by 2035.
The NextEra Energy share price has more than quintupled in 10 years, and even more dividends, which have been increasing every year for more than 25 years. Now, if the company could achieve this kind of growth while renewable energy was still in its infancy, imagine where it could be once countries start working towards their net zero emissions goals. 137 countries have already committed to achieving these goals, mainly by 2050.
NEE data by YCharts
Statista predicts that the global renewable energy market will exceed $ 1 trillion by 2027, compared to just $ 613.8 million in 2020. The projections until 2025 of the Renewables 2020 report of the International Energy Agency are still most remarkable:
- By 2025, spending by major oil and gas companies on renewables could increase tenfold.
- Renewable energies could account for 95% of the increase in total global electricity capacity.
- Renewable energies could represent a third of total world electricity, mainly hydropower, solar and wind.
Now consider this: NextEra Energy’s Energy Resources subsidiary is already the world’s largest producer of wind and solar power and has a backlog of 16.7 gigawatts (GW), which means short-term growth is expected. already integrated into its portfolio.
To top it off, NextEra Energy’s Florida Power & Light company is a stable cash flow machine, and its subsidiary NextEra energy partners a constant source of funds. Then there’s the opportunity for green hydrogen, which alone could represent a $ 12 trillion market by 2050.
There’s another reason I’m excited about NextEra: growth through acquisitions. After the failure of his bid for Duke Energy, I’m sure NextEra Energy is on the lookout for the next big merger or acquisition opportunity that could accelerate the journey of this renewable energy growth stock to $ 1,000 billion.
This company beats the best in its game
Customer relationship management (CRM) has emerged as the fastest growing software market as a growing number of companies now understand why the digitalization of customer management is essential to retain and win customers in a ever-expanding virtual world. These amazing statistics reveal why Salesforce.com‘s (NYSE: CRM) market capitalization could easily quadruple to $ 1 trillion well before 2035:
- The global CRM market grew 6% to $ 69 billion in 2020, according to Gartner.
- Salesforce led the market with a 19.5% share, two percentage points higher than the combined market share of SAP, Oracle, Microsoft (NASDAQ: MSFT), and Adobe, according to Statista.
- While the market shares of SAP and Oracle fell in 2020, the market share of Salesforce fell from 18.4% in 2019 to 19.5%.
- Salesforce has more than doubled its revenue in the past three years.
- Salesforce predicts revenue will exceed $ 50 billion by 2026, compared to $ 21.1 billion in fiscal 2021.
Clearly, Salesforce has its pulse in the CRM market like no other. Salesforce makes extensive use of artificial intelligence, and its recent acquisition of the Slack enterprise messaging platform could be a game-changer as Slack competes directly with Microsoft’s Teams platform. Slack added a record 13,000 new paying customers and had a total of 169,000 paying customers last quarter, including big ones like IBM.
Since Salesforce is also already profitable, its journey to a $ 1,000 billion market cap should be easier if it can increase sales as planned.
These industries could explode, and this stock could also
Limited sea‘s (NYSE: SE) Market capitalization has grown at an incredible rate to reach $ 189 billion from just $ 4.9 billion in October 2017. Past performance is no guarantee of future results, but Sea Limited’s market capitalization growth up to now was no accident: it was supported by exponential growth in turnover and gross profit. And, if Sea Limited can continue to create a sensation in the two major markets it targets, nothing will prevent its stock from reaching $ 1,000 billion.
SE market capitalization data by YCharts
Sea Limited’s integrated online platform forms the basis of its three core businesses:
- Entertainment (games): Garena.
- E-commerce: Shopee.
- Digital financial services: SeaMoney.
Here’s how each business is doing:
- Garena: Quarterly Active Users (QAU) and Quarterly Paid Users (QPU) reached 725.2 million and 92.2 million respectively in the second quarter of 2021. QAU and QPU were 402.1 million and 35.7 million until March 30, 2020.
- Shopee: The gross value of merchandise and orders reached $ 15 billion and $ 1.4 billion, respectively, in the second quarter of 2021, down from just $ 6.2 billion and $ 0.4 billion as of March 30, 2020.
- SeaMoney: Mobile wallet payment volumes crossed $ 4.2 billion in the second quarter of 2021, down from just $ 1.1 billion as of March 30, 2020.
If anything, these numbers indicate the growth potential of Sea Limited.
Its flagship game Free fire to beat Tencent‘s (OTC: TCEHY) PUBG Mobile to become the world’s third most downloaded mobile game in August 2021. Shopee is already the leading e-commerce company in Southeast Asia and Taiwan, and is now expanding into Latin America, Europe and even India. SeaMoney is expanding beyond mobile payments – it has already obtained a banking license in Singapore and recently acquired Indonesian bank PT.
Keep in mind, however, that Sea Limited’s losses are increasing, and this is something that may not be right for some investors. However, Sea Limited is a typical growth stock focused on customer and revenue growth, and has successfully monetized Garena to reinvest the money in e-commerce and financial services beyond Asia. from the South East. If you believe in the power of these two companies, Sea Limited could be a huge winner by 2035.
10 stocks we prefer over Sea Limited
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Teresa Kersten, an employee of LinkedIn, a subsidiary of Microsoft, is a member of the board of directors of The Motley Fool. Neha Chamaria does not have a position in any of the stocks mentioned. The Motley Fool owns stock and recommends Microsoft, Salesforce.com, Sea Limited, Tencent Holdings and Visa. The Motley Fool recommends Adobe Inc., Duke Energy, NextEra Energy, and SAP SE. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.