When so many changes and challenges are happening all at once, there is always great opportunity and great risk. But what we’re seeing in the market now is that a new class of stocks — mega-cap stocks — has been created that capitalizes on both. They are the new market titans, but they are also the stocks that investors turn to when times get worrisome.
Generally, once “new rules” get set in the market, a correction comes along and resets the rules back to the long-term standard. And before I utter the words, “it’s different this time,” I will simply say that these stocks represent some of the most widely held stocks in the world.
They are held by institutions and individuals alike on such a massive scale it’s hard to imagine any of them falling off a cliff. Now, they may have tough times, as some already have, but these seven mega-cap stocks with solid foundations are long-term stocks that will continue to deliver come what may.
Each and every stock on this list has either an “A” or “B” rating in Portfolio Grader. Let’s take a look:
- Apple (NASDAQ:AAPL)
- Amazon (NASDAQ:AMZN)
- PayPal (NASDAQ:PYPL)
- Taiwan Semiconductor (NYSE:TSM)
- Microsoft (NASDAQ:MSFT)
- NVIDIA (NASDAQ:NVDA)
- Walmart (NYSE:WMT)
Mega-Cap Stocks: Apple (AAPL)
At the beginning of August 2018, AAPL was the first stock to break the $1 trillion market capitalization ceiling. That was pretty amazing.
You know what is even more amazing? It only took two years before it was the first stock to break the $2 trillion market cap ceiling. That is some incredible growth.
And in that time, the company didn’t do much differently than it usually does, upgrading products and shuffling its product line. It didn’t launch a new line of products or move into a new sector. It simply became a stock that everyone wanted for both growth and safety.
Apple represents the best of big tech but is also well established — the perfect long-term stock. And the talk about moving into electric or self-driving vehicles is pretty exciting stuff for the decade ahead.
In the past year this behemoth is up a whopping 73% and still has a dividend that is better than most bank certificates of deposit (CDs).
There are two things that founder and CEO Jeff Bezos has developed that have launched Amazon into the stratosphere of mega-cap stocks and made it one of the most reliable long-term stocks in the market — a focus on customers and Amazon Web Services (AWS).
The former was there from the very beginning. When the company was young and faced off against Barnes & Noble, the biggest bookseller in the world at the time, Bezos told his small crew to worry about the customers, not the competition.
And after building a thriving book business and moving into consumer goods, Bezos and his engineers built a massive database that turned into the most successful cloud-computing businesses in the world.
With a $1.66 trillion market cap, AMZN continues its expansion. And so does the stock, up 75% in the past 12 months.
Launched by super-investors Elon Musk, Peter Theil, Musk’s brother and a handful of others, PYPL is one of the forefathers of the fintech movement. And it continues to expand its horizons today, even after the founders have moved on to new ventures.
The launch of peer-to-peer (P2P) payments platform Venmo wasn’t fully embraced when it started, but now it has spread like wildfire and is one of the dominant P2P payment platforms in the world.
At this point, PYPL would be a big fish to swallow by a big financial or tech firm, but it could do some interesting joint ventures or even buy a bank and get into a broader range of traditional bank offerings. That’s a trend in fintech now, and a merger of equals could be interesting.
The stock is up 113% in the past 12 months. It’s not exactly cheap, but it has some really exciting long-term prospects to boost its growth.
Taiwan Semiconductor (TSM)
One long-term trend sped up last year — the adoption of the digital economy. Between lockdowns and self-imposed isolation, reaching out was done more with electronic devices than in-person interactions.
It’s no surprise then that chipmakers had a very good 2020. And that isn’t over. These are long-term stocks that will continue to grow, because we’re not going back to a less digital world when the pandemic is over.
There are chips in everything now, from toaster ovens to earbuds. Server farms are getting bigger as the demand for cloud computing and 5G telecom expands.
And the largest chipmaking foundry in the world is TSM. You can name almost any major fabless semiconductor maker and it is a client of TSM, including AAPL and NVDA in this article.
The stock is up 123% in the past year, yet it’s still trading at a P/E (price-to-earnings ratio) of 36.
Next on my list of mega-cap stocks, with a $1.5+ trillion market cap, is Microsoft. It wasn’t that long ago that MSFT was teetering between prominence and afterthought. But no longer.
It has built its own fast-growing, high-margin cloud-computing division, created its own line of industry standard computers and leveraged its world-renowned software applications. And it now stands as one of the premier long-term tech stocks on the planet.
The dominance that Apple displays within its closed garden, MSFT has in the open world beyond the AAPL world. And even there, the two titans have come to a grudging realization that they both need each other for continued growth and support.
The crazy thing is, for all the power and promise that MSFT has, it hasn’t risen as quickly as other big tech in the past year — it’s “only” up 37%. It also has a reliable 1% dividend.
Graphic processing units (GPUs) were a pretty niche market for a long time. Gamers would pay up for high-performance GPUs, as would research facilities and IT departments in tech-dependent firms. But it wasn’t a major growth sector.
And that was good news for NVDA, which dominated the niche. And when it blew up with more digital commerce and mobility, the company was the biggest game in town. As server farms grew to supply big data, cloud computing, 5G and the internet of things, NVIDIA was supplying the chips to run the machines that kept everything buzzing along. That also includes the bitcoin boom.
At this point, this GPU firm continues to set the industry standards for performance and quality. Certainly, there are competitors, but NVDA has proven it can deliver time after time.
The stock is up 120% in the past year and will continue to be one of top long-term tech stocks in the market.
After all these sexy big-tech stocks, the world’s largest retailer seems like an oddity on this list of mega-cap stocks.
However, it has been WMT’s adoption of tech that has kept it relevant, especially in the past few years. As one of the leading “big-box retailers” there was a significant threat to its business model when the pandemic hit.
But WMT had already seen the power of online retail and the threat that AMZN posed if the company didn’t make an effort to develop its own robust e-commerce presence. That has helped keep Walmart a powerhouse.
In 2019, the company racked up $340 billion in retail sales. Amazon had $112 billion. AMZN still has a strong lead in online sales (about 38% vs. 5%), but people are shopping again. And they get value for their money when they shop at Walmart.
The stock is up just 26% in the past 12 months, is well valued and delivers a solid 1.5% dividend.
On the date of publication, Louis Navellier has positions in AMZN, PYPL, TSM, MSFT and NVDA in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.