Not that many years ago, companies with market values topping $100 billion or $200 billion were quite impressive. But times have changed, and many large companies have grown far larger. In 2020, Apple became the first company to pass the $1 trillion mark. It now has plenty of company, with, for example, Amazon.com recently valued at $1.8 trillion and Microsoft carrying a $2.5 trillion price tag.
Meanwhile, Apple itself recently sported a market capitalization of nearly $2.9 trillion. Here are three companies that seem poised to join the club within a decade, if not much sooner.
You have likely heard of Salesforce.com (NYSE: CRM), as it has been around since 1999 and has grown into a $260 billion enterprise. The company explains its business well in this nutshell: ” Salesforce is a customer relationship management [CRM] solution that brings companies and customers together. It’s one integrated CRM platform that gives all your departments — including marketing, sales, commerce, and service — a single, shared view of every customer.” It’s clearly doing well, as it has more than 150,000 businesses as customers.
For Salesforce.com to become a trillion-dollar business, it has to roughly quadruple in value over a decade, which equates to an approximate annual growth rate of 15%. That’s not a terribly tall order for the company, considering that its total revenue grew by 24% year over year in this fiscal year’s first nine months, with the company projecting similar growth in its last quarter. Much of Salesforce’s revenue is subscription-based, which is extra appealing, as that tends to be relatively reliable and automatic.
Meanwhile, once customers start relying on the company’s suite of software services, it can be hard for them to switch to another provider. This stickiness is a competitive advantage.
Costco (NASDAQ: COST), the world’s third-largest retailer, was recently valued near $235 billion. It, too, would need to roughly quadruple to hit that trillion-dollar value — and doing so in a decade would require an average annual growth rate near 16%.
Costco offers a lot to like for investors, as it does a much better than average job of serving its three main stakeholders: Customers, employees, and shareholders. It aims to cap price mark-ups at about 13% or 14%, it offers above-average pay and benefits, and it has grown in value by an annual average of more than 21% over the past decade.
The company’s revenue grew by more than 17% year over year in its fourth quarter, and its last fiscal year, with net income per share growing by more than 20% over both periods. As with any company, such robust growth rates are not guaranteed for the years ahead, and Costco’s shares are not exactly cheap these days, but it still stands a decent chance of quadrupling within a decade — and if not, perhaps soon thereafter.
Shopify (NASDAQ: SHOP) has likely given many shareholders nosebleeds from its rapid ascent since its 2015 initial public offering (IPO): Its shares have soared more than 8,800%, averaging an annual gain of about 98%. That pace of growth is far from likely to continue, but there’s still ample room for the company to grow. Its recent market value was $190 billion, meaning that it will need to roughly quintuple in size to hit the trillion-dollar mark, averaging growth of about 18% annually over the coming decade.
That may not be a stretch for the company that bills itself as “The all-in-one commerce platform to start, run, and grow a business.” Shopify President Harley Finkelstein has noted: “It took 15 years for our merchants to get to $200 billion in cumulative GMV, and just 16 months to double that to $400 billion.”
Shopify offers tiers of differently priced services for companies of different sizes, ranging from $29 monthly for start-ups and entrepreneurs to more than $2,000 monthly for larger companies. It sees its total addressable market (TAM) for small businesses alone valued at $153 billion, defining it as “Anyone who wants to make more money from their site than they pay for it.” Already, Shopify is No. 2 in market share for U.S. Retail E-commerce Sales as of late 2020, behind only Amazon.com.
These three companies have been growing rapidly and have plenty of room for further growth, though none are trading anywhere near bargain-basement prices. Buying into them now if you’re a long-term investor will give you a decent chance of them hitting a trillion dollars in value within a decade, but for even better results and more margin of safety, you might consider adding these growth stocks to your watchlist while waiting for a pullback.
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Selena Maranjian owns Amazon, Apple, Costco Wholesale, Microsoft, and Salesforce.com. The Motley Fool owns and recommends Amazon, Apple, Costco Wholesale, Microsoft, and Salesforce.com. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.