It’s easy to make horse racing analogies when it comes to investments. You place your money on a contender, hope they do better than the rest, and when they’ve won, you cash in for much more than you invested. There’s a very specific race going on right now, though, and it is one that investors around the world are watching closely.
The market capitalization of companies has long been seen as a way to rank their comparative success and value. The higher a company’s market cap, the more it is worth. With a revival of the US stock market, investors are now trying to figure out what company will be the first to break the $1 trillion mark.
The front runners
Although the tech bubble’s burst a few decades ago may have put some investors off this sector, you only have to mention a few names to show that it is still a big money industry. Technology companies such as Apple and Google are hotly tipped to be the front runners for reaching a $1 trillion market cap.
Apple is currently the world’s largest company and one of the most recognizable global brands. Their market cap has peaked at $700 billion, and with steady growth it seems very possible the computer giant will be first to reach $1 trillion.
Having branched out beyond its famous search engine, Google is not far behind. As the tech company expands further, its market cap is also expanding. Currently the third largest company in the world, it has a $390 billion market cap, the result of year on year growth since its IPO in 2004.
The likely losers
Although ExxonMobil is the world’s second largest company and has hit the $500 billion market cap, it’s unlikely that it or any other traditional energy firm will hit $1 trillion. As more consumers and companies look for alternative energy sources, the oil companies that have long been at the top of the tables are getting surpassed by newer companies.
While this isn’t to discount the growth of these companies, they aren’t expected to be the winners of this particular race. As anyone in Dubai can tell you, though, the oil industry shouldn’t be counted out entirely. The energy industry as a whole does still stand as a good investment, particularly those companies that are investing in other energy sources.
The dark horses
While the $1 trillion market cap race is unlikely to see any big upsets, there are a few dark horses in the running. Some of the more innovative companies, like Tesla, and those in the health care sector, like Gilead Sciences, are seeing fairly rapid growth. Depending on what these companies can produce in the coming few years, it is possible for them to surpass the tech giants that are currently in the lead.
At Prestige Wealth Solutions, we know that it can be a challenge to find the right investment. It takes more than just going for the current top companies to have a long term financial success, as many of the current choice investments prove. The top companies of even 10 years ago are no longer the top contenders for today’s market’s biggest goal.