Mega-cap stocks can provide a solid foundation for your investment portfolio.
Companies with market capitalizations of more than $200 billion tend to have more diversified revenue streams and superior profitability than their smaller rivals. Thus, they can help you grow wealthier with less risk and volatility.
Here are two mega-cap stocks that are particularly well-positioned to deliver handsome gains to investors in the year ahead.
1. ExxonMobil: The oil giant
The specter of military conflict in the Middle East could drive oil prices sharply higher in 2020. While many companies would see higher costs eat into their profits if such an unfortunate situation plays out, others would become even more profitable. Oil and gas titan ExxonMobil (NYSE:XOM) is well situated in this latter group.
As a $295 billion enterprise, ExxonMobil is one of the largest companies in the global energy industry. It has some of the most prized oil and gas assets, and its diversified business lines -- which span across the exploration, production, refining, and chemicals portions of the industry -- allow it to remain profitable in nearly all pricing scenarios.
Importantly, ExxonMobil is far more than a short-term play on potentially higher oil prices in 2020. It's investing heavily in projects that allow it to profit from the long-term growth in oil and gas demand around the world.
Despite the growth of renewable sources of energy, Exxon estimates that as much as 550 billion barrels of additional oil will be needed by 2040. For its part, Exxon expects to increase its production to approximately 5 million oil-equivalent barrels per day by 2025, doubling its profits in the process.
All told, ExxonMobil's diversified revenue streams, long-term earnings growth potential, and bountiful 5% dividend yield all help to make its stock an attractive investment today.
2. Facebook: The social media king
Despite the hoopla surrounding privacy scandals, data manipulation, and threats of increased scrutiny from regulators, Facebook's (NASDAQ:FB) stock is currently trading near all-time highs.
Facebook's current market cap of more than $600 billion is well justified. Approximately 2.8 billion people use its massively popular collection of social media apps, which include Instagram, WhatsApp, and Messenger, in addition to Facebook's namesake platform.
Together, these properties helped the social media giant generate more than $17.6 billion in revenue in the third quarter alone.
Advertising dollars follow eyeballs, and with more than 2 billion people visiting its social networks every day, Facebook's digital ad services remain in high demand from marketers around the world.
But rather than sit back and collect its ever-growing ad fees, Facebook is investing aggressively in new technologies that will allow it to provide even more value to its advertising clients.
It's also a leader in virtual reality technology -- another potentially massive market that's projected to grow to nearly $45 billion by 2024, according to research company MarketsandMarkets.
With its VR business still early in its expansion cycle, and some of its major apps -- such as WhatsApp and Messenger -- only in their nascent stages of monetization, Facebook has plenty of growth ahead. Investors who buy shares of this tech stock today should be well rewarded, as Facebook fulfills its massive earnings potential in the years ahead.