The stock market has become enthralled with market capitalization valuations now that Apple Inc. (NASDAQ: AAPL) has reached the elusive $1 trillion mark. Several companies are ready to join Apple in that $1 trillion value club, but what this nine-year-old bull market also has brought is a whole slew of companies that are now considered to be mega-cap stocks.
The investing community is going to have to decide what actually makes for a mega-cap stock. Prior to the great recession, a mega-cap required a value of $100 billion or more. Some investors have raised that mark to the $200 billion mark now, and others are using $300 billion as the benchmark.
24/7 Wall St. has been tracking the gains and losses of many companies, and the $100 billion market capitalization mark still has many of those companies bumping up against it or within striking distance. There are also many companies that have been worth more than $100 billion before running into some stock price issues. For this reason, we have screened for 15 public companies that are likely to be in the $100 billion market cap club in the foreseeable future.
Investors need to consider that there are currently about 25 U.S. companies that have a market cap of $200 billion or more. If you expand that list to include $100 billion in market cap, there are nearly 60 companies.
The race to get to $100 billion in market cap may not happen overnight. It also goes without saying that a solid market correction would wipe out the $100 billion ambition for quite some time.
Here are the 15 companies that appear most likely to enter or get back into the $100 billion market capitalization club among U.S. stocks.
Costco: Almost There!
Costco Wholesale Corp. (NASDAQ: COST) has a market value of about $97.6 billion, but it seems pricey for value investors at 31 times expected earnings. That said, it is valued at about 0.7 times its sales, which may feel less atrocious for a growth-oriented retail play that seems to be able to keep getting more of its customers’ total retail spending dollars every year. With almost 10% earnings growth expected over the next two years, any upside earnings surprises and/or market strength should make the $100 billion market cap look easily within reach.
Bristol-Myers Squibb: Can It Recover?
Bristol-Myers Squibb Co. (NYSE: BMY) is valued at around $96 billion, based on a $59 share price, and its 52-week high of $70.05 has shown that it only has to recover a tad for the stock to rejoin the $100 billion market cap club. With its valuation of 16.5 times expected current year earnings, Bristol-Myers Squibb actually has a five-year share price high of about $75.
Qualcomm: Will Buybacks Keep Its Valuation Down?
Qualcomm Inc. (NASDAQ: QCOM) used to be in the $100 billion club, and its Apple-war, Broadcom fight and failed NXP acquisition (as well as some growth concerns) have gotten in the way for shareholders. With a value of $96.5 billion, Barclays recently upgraded the shares to Outperform and raised its target price to $80 from $64. That would imply a perceived market cap of closer to $120 billion if it comes to fruition. That said, Qualcomm’s aggressive stock buyback plan (and the accelerated tender plan) could slow its chase to the $100 billion market cap.
24/7 Wall St.