In today's market environment, with stocks across nearly all sectors down from their recently loftier valuations -- and dealing with bout after bout of volatility -- it might be difficult to imagine a day when some of these companies could achieve trillion-dollar market caps. However, long-term investors should always keep an eye on strong businesses that can deliver growth and portfolio returns over a period of many years.
If you're discouraged about the stock market's performance over the last few months, bear in mind that over the last five years alone, the S&P 500 has delivered a total return of more than 100% to investors. That illustrates a fundamental point: One of the most effective and sustainable means of building a stronger financial future is to invest -- and stay invested -- in the stock market.
On that note, if you're searching for top-notch companies with solid businesses to add to your portfolio -- and keep in it for the long haul -- here are four that I think could be worth $1 trillion apiece by 2035.
Image source: Getty Images.
1. UnitedHealth Group
One of the world's largest health insurance companies and the largest health insurer by revenue in the U.S., UnitedHealthGroup (UNH 0.30%) currently boasts a market cap of about $450.3 billion.
In 2021, it reported total consolidated revenue of nearly $288 billion, a 12% jump from the prior year. Meanwhile, adjusted net earnings increased by 13%.
Note that the global health insurance market alone is on track to hit a valuation of more than $3 trillion by the year 2028, according to the analysts at Fortune Business Insights. Plus, UnitedHealth Group's business encompasses far more than this highly lucrative market. It also offers a wealth of other healthcare industry services that include technology, data and analytics solutions, and pharmacy care services.
With shares trading down about 5% year to date, now might be an excellent time for shrewd investors to snatch up the stock at its current price.
2. Shopify
While consumer sentiment may fluctuate, there's no denying that e-commerce is the way of the future. As a company that enables businesses of all sizes to build online sales sites to complement their existing brick-and-mortar retail presences or to operate as entirely e-commerce businesses, Shopify (SHOP 1.11%) is a no-brainer pick for growth-hungry investors.
Its share price has fallen by over 50% year to date, but with a market cap of roughly $90 billion, Shopify has plenty of room to grow. Keep in mind, the global e-commerce industry is on track to hit a valuation of nearly $19 trillion by the year 2027, according to a report from Research And Markets.
Shopify recently announced a landmark partnership with JD.com that will enable U.S. merchants to sell to customers in China, the world's largest e-commerce market. This could not only open up untold opportunities for the millions of merchants that use Shopify's platform, but it could also mean billions of dollars in additional revenue and profits for the company in the years ahead.
Despite reporting 57% revenue growth in 2021, the stock has taken a beating after management lowered its guidance for the first part of 2022, citing the impact of inflation on consumer spending and the normalization of spending behaviors as we enter a different phase of the pandemic.
Nonetheless, Shopify's business fundamentals remain strong, and its platform will continue to be a go-to for entrepreneurs to launch and scale profitable online businesses. For patient investors, now looks like an excellent time for long-term investors to buy up this stock at a bargain.
3. MercadoLibre
MercadoLibre (MELI 3.09%) is Latin America's largest e-commerce platform, and according to the company, it's "one of the top 10 most visited e-commerce websites in the world." Although it hasn't been immune to the volatility hitting growth stocks recently (shares are down about 18% year to date, giving it a market cap of around $55 billion), there are loads of opportunities left for it to tap into.
According to recent data from the fintech and e-commerce giant, it boasts 65 million buyers and 12 million sellers across 18 different countries, with more than 500 visits per second facilitated by its platform.
While Latin America has about twice as many people as the U.S., its e-commerce market is currently much smaller. But online retail sales in the region are projected to hit $160 billion by 2025. And MercadoLibre's Global Selling program enables cross-border transactions so that merchants outside of Latin America can sell to this fast-growing demographic. Given MercadoLibre's rapidly expanding business footprint and exceptional track record of revenue growth, it's not a stretch of the imagination that its market cap could touch the $1 trillion mark.
MercadoLibre reported that it had 78.7 million unique active users visit its platform in 2021's third quarter, driving net revenue of $1.9 billion, a 73% jump year over year. Meanwhile, total payment volume on the platform was up 60% year over year.
4. Airbnb
Last but not least is a newer arrival to the public markets: Airbnb (ABNB 0.75%). Its explosive IPO in December 2020 was the largest of that year, as the company's market cap surpassed $100 billion on the first day of trading. Airbnb's current market cap sits at around $120 billion.
I'm not usually one to tout travel stocks as high-flying long-term buys, but in my book, Airbnb stands in a class of its own. Even before the pandemic, Airbnb controlled about 20% of the U.S. vacation rental sector, which is part of a global market on track to hit a valuation of more than $112 billion by the year 2030. It's no longer a platform that people use for travel alone. The reality is, more and more people are using Airbnbs to live in for extended periods of time.
"Long-term stays of 28 days or more remained our fastest-growing category by trip length and accounted for 20% of gross nights booked in Q3 2021, up from 14% in Q3 2019," the company noted in its third-quarter earnings report.
It further explained: "Long-term stays represent a broad set of use cases -- including extended leisure travel, relocation, temporary housing, student housing, and many others... More than 90% of active listings now accept long-term stays."
In fact, CEO Brian Chesky recently announced that he would be living in a rotating slate of Airbnb rentals himself "as the travel revolution becomes reality." With more people transitioning to hybrid, flex, remote, and freelance work on a permanent basis, the company is ideally poised to meet the changing needs of hosts and guests while maintaining its longevity and relevance to its users.
Even as other travel businesses continue to struggle against headwinds generated by the pandemic and the changing world of travel, Airbnb's innovative platform is facilitating this shift to slower travel and flexible living arrangements. For patient investors willing to wait out some near-term volatility, it looks like an incredibly smart stock to buy and hold.
