Experts Debate: What Stock (Besides Amazon) Is Most Representative of the U.S. Stock Market?

Few companies have become as dominant or as diverse as Amazon.com (AMZN 2.79%) in such a short period. In barely more than two decades, Amazon has become the dominant online retailer in just about every product category, while also establishing itself as one of the biggest cloud services and video and music streaming providers. 

In many ways, Amazon is an excellent reflection of the U.S. stock market; a massive consumer-driven business with a healthy dose of high-growth tech mixed in. But it's not the only stock that can fit this bill. On the Oct. 26 edition of "The Wrap" on Motley Fool Live, host Jason Hall asked Motley Fool contributor Brian Feroldi and analyst Emily Flippen to name a stock not Amazon that's also highly representative of the U.S. economy. 

Transcript:

Jason Hall: I want each of you. I'm going to have, Brian, you go first this time and let Emily go last. But give me one company that's most representative of the U.S. stock market, and you can't pick Amazon.

Brian Feroldi: Oh. It's the stock market.

Hall: Yeah!

Feroldi: I thought it was the economy. Well, [...] my answer, I'll just say Walmart (WMT -0.17%). Is there anything more American than Walmart? It is these megastores that sell absolutely everything, and it's been a tremendous success story since it was founded 60 years ago. At this point, it's a $400 billion company. I think it's a company with the most dollar amount of sales in at least America, and maybe the world. No, probably just the U.S.

But you want to know how the American consumer is doing? You watch Walmart. That is the American consumer company. Its stock has actually done pretty darn well over the last 10 years as it has shaken the narrative that Amazon is going to eat its lunch and it's shifted successfully to becoming seen as a viable No. 2 in the world of e-commerce. They also have the option to buy online and pick up in store, and they're essentially copying everything that Amazon does, just 10 years later. It's going to be a couple more years before they get to the cloud computing business, I bet.

Hall: Three things that I am going to tie into that to make Walmart a pretty good representation. Our economy is driven by consumer purchases, consumer buying, so from an economic perspective, yeah. But also consumer revenues, you think about Apple, that's the biggest company in America, the biggest individual stock. They sell consumer products. They're a technology-based company.

There are some ties in there, but here is about one. Think about this. Walmart has done a very good job being adaptable. I think our stock market is very reflective of companies that innovate, and also think about healthcare. This is a company that spent a lot of money bringing in more healthcare things, their pharmacy services, eye care, all that kind of stuff. Not a bad pick. Emily Flippen, can you go one better?

Emily Flippen: I'm not sure if it's one better, but I can provide an alternate solution. First of all, I chuckle out of Brian feeling like he need to change his answer because the terminology changed from the economy to the stock market. Since when did the economy and the stock market diverge so greatly? It's not really how it's supposed to be, historically.

I actually think Walmart, whether you're looking at the economy or you're looking at the stock market, is a really strong answer. I'll add to that. You mentioned Apple. Apple is also a great indicator.

I'll probably say Microsoft (MSFT 2.73%) here, though. It's a cop-out answer, though, because when I think about reflecting the stock market as a whole, not only is Microsoft in a lot of indexes thanks to its size, but it's in one of the largest constituents of the S&P 500, which is widely considered the most accurate benchmark for individual investors. It's what we've benchmarked, too, here at the Fool for the most part. Microsoft within itself is already being considered somewhat of a benchmark for the U.S. stock market.

But they also hit on a lot of tiers. They hit on consumer consumption -- they sell consumer products. But they also have this entire cloud computing Azure business and gaming division that are really makes it a well diversified representation of the U.S. economy within itself. I'm not sure if that's as strong of an answer as Walmart. I actually really liked Walmart as an answer, but [Microsoft] will be what I'd go with.