- Apple, Microsoft, Saudi Aramco, Alphabet, and Amazon are trillion-dollar companies
- In this piece, we will analyze the pros and cons of investing in these companies
- To help you make a decision, we will use InvestingPro tools to analyze these companies
The trillion-dollar club is a highly exclusive group of companies with a market value exceeding $1 trillion.
It includes 5 companies: Apple (NASDAQ: AAPL ) ($2.7 trillion), Microsoft Corporation (NASDAQ: MSFT ) ($2.4 trillion), Saudi Aramco (TADAWUL: 2222 ) ($2 trillion), Alphabet (NASDAQ: GOOGL ) ($1.5 trillion), and Amazon.com (NASDAQ: AMZN ) ($1.2 trillion).
But, with such a sky-high market cap, do these companies still represent a buying opportunity with more room for growth?
In this article, we will utilize the InvestingPro tool to analyze the performance of these 5 companies. You can do the same for virtually any stock, just click on this link and start your free trial today!
Apple's strengths include aggressive share repurchases, a high dividend on invested capital, strong yield in the last 3 months, solid earnings supporting dividend payments, low price volatility for the stock, and sufficient cash flows to cover interest payments.
However, it is worth noting that 17 analysts have downgraded the earnings forecast.
Analysts have lowered the earnings per share (EPS) expectations for Apple's fiscal third-quarter results, scheduled for release on July 26. The EPS estimate has decreased by -10.3% over the last 12 months, from $1.32 to $1.19 per share. The projected revenue for the quarter is $81.678 billion.
Microsoft, the world's second-largest company by market capitalization, is currently valued at an average of $329.52, according to InvestingPro's fair value tool. The company is low-risk and exhibits strong financial performance.
Microsoft boasts several favorable factors, including a high return on invested capital and a consistent dividend increase over 17 consecutive years. Additionally, the stock exhibits low price volatility, and its cash flows adequately cover interest payments.
However, it's worth noting that the Relative Strength Index (RSI) indicates the stock is currently in overbought territory. Furthermore, there is a cautionary note from InvestingPro regarding the recent slowdown in revenue growth for Microsoft.
Looking ahead, Microsoft is set to announce its fiscal fourth-quarter results on July 27. Analysts anticipate revenue of $55.417 billion. However, the EPS expectations for this period have been revised downward by -8.5% from $2.80 to $2.56 per share based on the trailing 12 months' data.
3. Saudi Aramco
The oil sector makes its way into the coveted realm of trillion-dollar companies, with Saudi Aramco securing the third position. InvestingPro reveals that Saudi Aramco has a fair value of $36.75, boasting a low-risk profile and robust financials.
Saudi Aramco stands out with several favorable factors, including its high return on invested capital, consistent growth in earnings per share, a healthy balance sheet with more cash than debt, a favorable price-to-earnings ratio compared to near-term earnings growth, and low stock-price volatility.
However, there is a downside as two analysts have recently revised their earnings forecasts downward for the upcoming period.
Investors eagerly await the second-quarter 2023 results, which will be announced on August 14. According to InvestingPro, analysts have adjusted their EPS expectations for this quarter by -4.3%, anticipating a decrease from $0.55 to $0.53 per share over the trailing 12 months. The revenue forecast for the quarter stands at $433.3 billion.
Alphabet currently holds the fourth position among the world's largest companies. According to InvestingPro, Alphabet has an average value of $138.47, indicating a low-risk profile, and its financials remain strong as ever.
Alphabet, the owner of Google, has several positive factors in its favor. These include a strong return on invested capital, a healthy cash position compared to its debt, and a history of high profitability over the past decade. Additionally, 24 analysts have revised their earnings estimates upwards for the company's upcoming period.
However, there are some concerns. Alphabet's current P/E ratio is very high. Furthermore, InvestingPro highlights two alerts: a recent slowdown in revenue growth and the company's decision not to pay dividends to shareholders.
Investors can expect Alphabet to report its Q2 2023 results on July 25. It's worth noting that analysts have revised their EPS expectations downward by -15.7% for this quarter, from $1.57 to $1.33 per share, over the past 12 months.
Concluding the list of trillion-dollar companies, we have Amazon. The e-commerce giant's fair value is at $128.79, according to InvestingPro. It carries a medium level of risk and has maintained decent financial performance.
Amazon, a prominent player in the e-commerce industry, demonstrates several strengths. Notably, it has achieved high profitability consistently over the past decade, exhibiting strong financial performance in the past three months. Furthermore, there is a consensus among analysts that the company's net income is expected to increase this year.
However, there are certain weaknesses to consider. The company has experienced a downward trend in earnings per share , and its valuation appears to be relatively high.
InvestingPro also alerts investors to the fact that Amazon operates with a moderate level of debt and does not distribute dividends to its shareholders.
The upcoming second-quarter 2023 results of Amazon are set to be announced on July 27. Analysts have revised their EPS expectations for this quarter by a significant -39.2% decline, from $0.56 per share to $0.34 per share over the trailing 12 months. The company's revenue guidance for the quarter stands at $131.1 billion.
InvestingPro tools assist savvy investors in analyzing stocks, as we did in this article. By combining Wall Street analyst insights with comprehensive valuation models, investors can make informed decisions while maximizing their returns.
Disclaimer: This article was written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel, or recommendation to invest, nor is it intended to encourage the purchase of assets in any way.
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