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It seems strange to think that United States Steel It was once one of the world's fastest growing stocks. But it must have been while taking advantage of a global steel boom to become the first billion-dollar company in 1901.
Similarly, General Motors capitalized on the automobile revolution to become the only company in the world valued at $10 billion in 1955. Exactly 40 years later, General Energy made history as the first market capitalization to exceed $100 billion.
Then, the widespread adoption of smartphones drove Apple to a record valuation of $1 trillion in 2018. It is now worth $3 trillion, along with microsoft.
Today, there are thousands of United States Steels companies (billion dollar companies) and hundreds of stocks above $10 billion. And there are 87 publicly traded US companies with a market capitalization greater than $100 billion. Even the sleepy FTSE 100 has six!
So history shows that it is a matter of when not if the next £1bn batch of shares emerges. Here are three that could get there in 10 years or sooner.
ASML
It seems that the current technological revolution will accelerate with the rapid progress of artificial intelligence (ai) and other advanced technologies.
The common denominator in all this is the semiconductor. And the only company that sells the machines necessary to manufacture cutting-edge chips is ASML (NASDAQ:ASML).
The Dutch company's extreme ultraviolet (EUV) lithography system required three decades of research and billions of dollars to perfect. It contains hundreds of thousands of components (some of which transcend the limits of physics) from a bewilderingly complex supply chain.
Good luck trying to replicate that!
This monopolistic position at the center of the industry means that it should continue to grow as its largest customers: Intel, Samsungand TSMC — build new chip foundries and upgrade existing ones.
By 2023, the company recorded net sales of €27.6 billion, a gross margin of 51% and net income of €7.8 billion. It now has an order book of 39 billion euros.
Now, a risk worth highlighting is the current geopolitical tensions between the United States and China. ASML is prevented from selling many of its products to Chinese customers. This is likely to slow its growth trajectory.
Still, because of its critical importance today, I support it becoming a trillion-dollar company, possibly the first in Europe.
With a market capitalization of $345 billion, its share price would need to rise around 189%. In my opinion, that can be achieved.
Mastercard and Visa
My next two candidates, Visa (NYSE: V) and MasterCard (NYSE: MA), also have enviable competitive positions. Outside of China, they dominate the digital payment processing market.
This immediately poses some risk, as the two companies face regulatory scrutiny. However, this has not yet affected its competitive or financial position. Visa processes more than 270 billion electronic transactions each year. Mastercard is not far behind.
To be honest, this doesn't surprise me. Everywhere around us, consumers are tapping into their phones and credit cards. Like millions of people, I rarely carry cash these days.
Then there is global e-commerce, which still has decades of global adoption and growth left.
Both companies take a small cut of every transaction that flows through their networks. This means that even inflation can provide a tailwind, assuming consumer spending doesn't fall.
With respective market capitalizations of $537 billion and $407 billion, Visa and Mastercard look poised to join the exclusive club of $1 trillion valuations over the next decade.
