Exactly 5 years ago, the world struggled to deal with a black swan event: the COVID-19 pandemic. There was so much uncertainty that people didn’t even know if they’d be alive in the next few weeks, let alone figure out where the market was heading. Anyone who invested in the S&P 5 years ago would have gained 83%. If you had bought at the exact bottom, you’d have gained twice that amount.
What the above proves is that the present isn’t necessarily an indicator of what the future holds. All companies that had their workflows disrupted have recovered, some more than others. Some companies have strengthened their supply chains. Others have improved their work-from-home capabilities. Industries like airlines and restaurants have modified their business models to cater to the new dynamics.
These companies have been able to deal with the changing dynamics because of their financial strength and innovation. A company’s past performance and its finances give a good idea of whether it will be able to survive bad times. That’s why when we look at the best mega-cap stocks to hold for the next 5 years, we look at how well they have grown in the last 5 years.
To come up with our list of top 20 mega-cap stocks to hold for the next 5 years, we considered stocks with a market cap of at least $200 billion and a 5-year sales growth rate of at least 10%.
20. Netflix, Inc. (NASDAQ:NFLX)
Netflix, Inc. is an entertainment services provider that offers feature films, TV series, games, and documentaries in different languages and genres. The company also provides members access to watch online content through TVs, TV set-top boxes, digital video players, and mobile devices. The company has grown its revenue by 14.25% over the last 5 years.
A few years ago Netflix was losing subscribers, raising concerns among shareholders. However, it has achieved an impressive turnaround by gaining 19 million subscribers in just the recent quarter. The company also grew its revenue by 16% YoY in Q4. The most interesting thing is its operating margins which went up from 21% to 27%, indicating that the company is retaining a greater portion of its revenue as earnings.
NFLX showed its capability of making profits by generating net cash of $1.5 billion from operating activities in the last quarter. The cash flows are not only helping with the stock buybacks but also bringing greater efficiency to the company’s content creation processes, which are capital-intensive by nature.
19. Microsoft Corporation (NASDAQ:MSFT)
Microsoft Corporation is a developer and supporter of software, devices & solutions, and services. The company operates through Intelligent Cloud, More Personal Computing, and Productivity & Business Processes segments. The company has grown its revenue by 14.4% over the last 5 years.
Microsoft’s stock has suffered due to the Chinese AI startup Deepseek and unlike some other major tech stocks, hasn’t been able to recover. The software company also announced its earnings a couple of days later, exceeding estimates. What the market did not like was the guidance for the ongoing quarter, which was below the expected numbers. The company’s cloud business is facing challenges, both at the supply chain level and the execution. However, the AI business is expected to do $13 billion in annualized revenue. This is still a fraction of the amount of money the company has spent, and plans to spend, on its AI infrastructure in the coming years.
Last week, MSFT announced setting up a data center in Poland for $700 million. The company already opened a data center in the same country in 2023, costing $1 billion. These investments are not only aimed at increasing the company’s computing power but also enhance the existing cooperation between the Polish army and the company.
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