One of the most exclusive circles in all of investing is the trillion-dollar club — whose membership is limited to those enterprises with a market cap of more than $1 trillion. Apple was the first U.S. public company to achieve this lofty benchmark, establishing itself as the club’s founder in August 2018. It was joined in rapid succession by Amazon, Microsoft, and Alphabet. Facebook recently joined their ranks, though Apple and Microsoft have since topped $2 trillion each.
Owning shares of these companies has been wildly profitable for long-term investors, with each stock exceeding the returns of the S&P 500 by a wide margin. The common threads that join them (market cap aside) are that each had a disruptive product or service, a significant market opportunity, and secular tailwinds to fuel their growth. Finding the next generation of stocks with similar attributes could be extremely lucrative for investors.
Let’s look at three high-growth stocks following a similar path that could join the trillion-dollar club — and enrich shareholders along the way.
Tesla: Current market cap — $620 billion
Tesla (NASDAQ:TSLA) is among the most widely cited companies with $1 trillion potential. The company revolutionized the market for electric vehicles (EVs), striking a chord with younger, more affluent car buyers, and making EVs more mainstream in the process.
While predictions vary, EVs are expected to begin outselling their fossil-fuel burning competitors as early as 2033, according to estimates by Ernst & Young. As the current industry leader, this puts Tesla in a strong position to reap the rewards of that growing secular trend.
In the first quarter, Tesla reported its highest-ever vehicle production and deliveries, despite seasonality and supply chain issues resulting from the pandemic. This helps illustrate the company’s path forward. Perhaps more importantly, however, over a multiyear time horizon, the company expects to achieve 50% average annual growth in vehicle deliveries.
That isn’t to say Tesla is without risk. Enigmatic CEO Elon Musk, while a visionary, is also something of a wild card. Reports surfaced early last month that Musk had twice violated a regulatory ruling that his social media posts be pre-approved by Tesla’s legal department.
The growing competition in the EV space is also well documented. Ford‘s Mustang Mach-E has been making inroads into Tesla’s dominance in the U.S., while Volkswagen has been eating into the company’s market share in Europe. Then there are the EV start-ups that seem to make headlines every week, though some have yet to produce their first vehicle.
However, given Tesla’s industry-leading position and its continuing momentum in production and deliveries, the company is well positioned to be a continuing force in the EV market and achieve a $1 trillion market cap over the coming decade.
Go to the news source: 3 High-Growth Stocks That Could Be Worth $1 Trillion in 10 Years — or Sooner