Now that stocks have charged back from the depths of the January and February selling, the Dow Jones Industrial Average (DJIA) and S&P 500 managed to come back to positive for 2016 last week. Investors are now wondering what they should be investing into. Defensive stocks with dividends are one strategy, but another is to invest in the mega-cap stocks worth $100 billion or more.
When companies reach mega-cap value, it creates a safety net in the minds of investors. With more than 40 companies worth $100 billion or more, some growth-minded investors would want to know which companies are the next most likely companies to be worth more than $100 billion.
24/7 Wall St. has identified seven companies that could easily reach the $100 billion mark. Some may have briefly been worth $100 billion previously, but companies that have recently pulled back to $100 billion or just under were not considered here. In short, this is an effort to find the next mega-cap stocks.
One word of caution is that stock buyback plans can always get in the way of formal market capitalization growth. As such, we included the relative values today and what the shares would likely need to rise to on a static basis from now in order to be worth $100 billion. Trading history and some brief color have been added as well.
These are the seven most likely candidates to be the next mega-cap stocks for investors.
Kraft Heinz Co. (NASDAQ: KHC) was last seen worth some $92.9 billion. With shares at $74.44, and with a 52-week high of $81.20, this newly created diversified food giant would have to see shares hit roughly $82.00 before the $100 billion valuation is reached. The consensus analyst price target is right at about $90.00.
Kraft Heinz is a recently conglomerated food company, with Warren Buffett as a key shareholder for the time being. Some investors feel that it could be a future DJIA stock, knowing that Kraft used to be before the Mondelez split.
With a share price of $104.86, United Parcel Service Inc. (NYSE: UPS) is valued at $92.7 billion. Its 52-week high is $107.32, but shares hit $110 in late 2014. The consensus analyst price target of $105.81 is also under the $100 billion market cap level, but some analysts see UPS rising to $120 or higher.
UPS is often highlighted by the growth of Amazon, but there are many growth avenues here, if self-delivery proves to be too expensive versus using a well-heeled logistics provider.
With shares only about 8% above their 2016 lows, Celgene Corp. (NASDAQ: CELG) was last seen worth $80.3 billion. The 2015 high was right at $140, and this stock was very briefly valued north of $100 billion, which would take place around a share price of $128 or so. Analysts have a consensus price target of $138.41.
Celgene is one of the top biotech outfits. It has been considered a Big Pharma takeover target in the past, and sales are expected to grow in the double-digits for at least two more years, and earnings per share (EPS) growth is expected to be 21% to $5.72 in 2016, followed by over 20% earnings growth expected in 2017.