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Feb. 12, 2019, 11:16 a.m. EST

7 stocks that prove bigger is better in 2019

Jeff Reeves reminds investors that sheer size — and market dominance — is a big advantage

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By Jeff Reeves, MarketWatch


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Microsoft is the largest U.S. company by market value.

After a sharp decline to end 2018, the stock market has been in rally mode for the past several weeks. But whether this run will last is anyone’s guess.

The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.0020%  is up an impressive 8% this year, thanks in part to some big earnings reports from high-profile names. That includes Facebook /zigman2/quotes/205064656/composite FB +1.06% , which gapped up double-digits after adding U.S. users.

But beneath the surface, there are still serious problems for Facebook amid privacy and fake-news controversies. And beyond this stock’s specific issues, there are broader market-wide concerns of slowing growth in 2019 and the risk political instability such as Brexit fallout, a global trade war or another government shutdown sapping the U.S. economy.

It’s hard to tell, then, whether the rally that started this year will persist. However, there is a small group of entrenched mega-stocks that are sure to come out ahead. Their dominance goes far beyond a simple calculation of their market cap, and ensures they can weather whatever the market throws their way.

Here are seven stocks that prove bigger companies are the way to go in 2019.

Walmart

You simply can’t have a discussion about big-time stocks without including Walmart Inc. /zigman2/quotes/207374728/composite WMT -0.04% , a retailer that is in many ways synonymous with the biggest of big businesses. It tops the Fortune 500 with more than $500 billion in annual revenue, and is among the 15 largest S&P 500 components, with a market value of $280 billion.

While some may be doubtful of its dominance in a digital age, consider that WMT is the No. 3 e-commerce portal in the U.S. with a respectable 4% of total online retail spend. And as evidenced by its $3.3 billion purchase of Jet.com in 2016, Walmart isn’t afraid to keep investing in this crucial sales channel. And with roughly $30 billion in annual operating cash flow to help fund these efforts, you can be sure Walmart has the means to stay on top regardless of all the talk about e-commerce disruption.

Amazon.com

Speaking of retail in a digital age, let’s move on to Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +0.22% . This pick is even bigger than Walmart, with a market cap of $790 billion and a price of around $1,600 per share. It’s among the three biggest companies in the U.S. But that dominance goes far beyond this headline metric.

Consider that, according to a 2018 report, roughly half of all e-commerce spending in the U.S. goes through Amazon.com — good for a 5% share of the entire nation’s retail spending. That’s a staggering tally! And while margins there are thin, it’s also worth noting that the tech giant’s Amazon Web Services cloud-computing arm is also dominant, with a market share of more than 30% — greater than the next four competitors combined. This is a company that clearly knows how to stay on top.

Microsoft

The largest U.S. corporation by market cap at this moment is software giant Microsoft /zigman2/quotes/207732364/composite MSFT +1.84% . But it’s not the $800 billion valuation that matters most, nor is it the $124 billion in projected 2019 revenue. Instead, it’s the company’s sheer dominance of enterprise market share.

Various instances of Windows command an 87% share of PC operating systems. And while second to aforementioned Amazon in cloud market share, Microsoft’s Azure is growing fast in this high-potential business segment. Sure, it’s not a go-to brand for anything mobile. But by maintaining its presence as a go-to technology name for businesses, MSFT has ensured it will remain relevant for many years to come.

/zigman2/quotes/210599714/realtime
US : S&P US
3,006.79
+0.06 +0.0020%
Volume: 1.55B
Sept. 19, 2019 5:17p
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/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 190.14
+2.00 +1.06%
Volume: 10.47M
Sept. 19, 2019 4:00p
P/E Ratio
32.22
Dividend Yield
N/A
Market Cap
$542.46 billion
Rev. per Employee
$1.57M
loading...
/zigman2/quotes/207374728/composite
US : U.S.: NYSE
$ 117.11
-0.05 -0.04%
Volume: 3.40M
Sept. 19, 2019 6:30p
P/E Ratio
26.39
Dividend Yield
1.81%
Market Cap
$333.09 billion
Rev. per Employee
$223,654
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,821.50
+4.04 +0.22%
Volume: 2.08M
Sept. 19, 2019 4:00p
P/E Ratio
75.57
Dividend Yield
N/A
Market Cap
$901.02 billion
Rev. per Employee
$359,671
loading...
/zigman2/quotes/207732364/composite
US : U.S.: Nasdaq
$ 141.07
+2.55 +1.84%
Volume: 36.10M
Sept. 19, 2019 4:00p
P/E Ratio
27.82
Dividend Yield
1.30%
Market Cap
$1077.13 billion
Rev. per Employee
$902,473
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