V - 3 High-Growth Stocks That Could Be Worth $1 Trillion in 10 Years - or Sooner
2024-02-15 11:45:00 ET
Today, just seven publicly listed companies are valued at a market cap of more than US$1 trillion. However, the widening GDP (gross domestic product) rates globally and expanding earnings base for corporates should drive valuations in the upcoming decade.
Here are three high-growth stocks that could be worth US$1 trillion within the next 10 years.
Visa stock
Valued at US$565 billion by market cap, Visa ( NYSE:V ) is a tech platform that connects merchants, customers, and financial institutions to expedite financial transactions and payments. It earns a fee to process these transactions and has gained massive traction in the last two decades due to the worldwide shift towards digital payments.
Moreover, Visa isn’t a lender and is immune to credit risk, making it among the best tech stocks to own in the fintech space.
Visa stock went public in 2008 and has since returned a whopping 2,100% to shareholders in dividend-adjusted gains. It pays shareholders an annual dividend of US$2.08 per share, indicating a yield of just 0.76%. However, these payouts have risen by 13.5% annually in the last 13 years.
Visa is the undisputed market leader in this vertical, processing US$15 trillion worth of transactions annually. Priced at 28 times forward earnings , Visa stock trades at a reasonable valuation, given its earnings are forecast to rise by 13.3% annually in the next five years.
Its current market cap suggests Visa needs to gain 45% to surpass a trillion-dollar valuation. In fact, Visa might be valued at US$1 trillion by the end of 2027 due to its solid earnings growth.
Eli Lilly stock
Valued at US$700 billion by market cap, Eli Lilly ( NYSE:LLY ) is also close to a trillion-dollar valuation. One of the largest healthcare companies in the world, Eli Lilly stock has returned 1,750% to shareholders in the last 20 years. Despite its massive size, Eli Lilly has increased sales from US$24.5 billion in 2020 to US$28.5 billion in 2022. Analysts now expect the company to increase revenue to US$51 billion in 2024.
A key driver for Eli Lilly’s sales is Mounjaro, a diabetes drug that raked in US$5.2 billion in sales in 2023. In the fourth quarter (Q4) of 2023, Mounjaro sales stood at US$2.21 billion, up from just US$279 million in the year-ago quarter. The drug’s sales in the U.S. totalled US$2.11 billion, up from US$257 million due to higher realized prices and robust demand.
Priced at 40.7 times forward earnings, LLY stock might seem expensive. But analysts forecast earnings to grow by over 40% in the next four years.
Advanced Micro Devices stock
While Eli Lilly and Visa are expected to surpass US$1 trillion in market cap in the medium term, Advanced Micro Devices ( NASDAQ:AMD ) might take a bit longer to reach the milestone, given its current valuation of US$278 billion.
AMD is a semiconductor giant that should benefit from the artificial intelligence megatrend. It is forecasted to increase sales from US$22.7 billion in 2023 to US$32.4 billion in 2024. Comparatively, earnings are estimated to more than double from US$2.65 per share to US$5.45 per share in this period.
So, AMD stock is priced at 32 times forward earnings, which is reasonable. If it maintains this valuation, AMD stock should surge over 120% in the next five years.
The post 3 High-Growth Stocks That Could Be Worth $1 Trillion in 10 Years — or Sooner appeared first on The Motley Fool Canada .
Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Advanced Micro Devices and Visa. The Motley Fool has a disclosure policy .
2024