This High-Growth Company Could Become the Next Trillion-Dollar Stock

Companies worth more than $1 trillion are a rare breed, at least for now. Many more companies will join this elusive group in the years and decades to come. And the next one to accomplish this feat could well be Elie Lilly (NYSE: LLY).

The pharmaceutical giant is one of the closest companies to a $1 trillion market cap among those approaching that threshold. Here’s why the drugmaker could outpace its competitors and continue to grow long after.

Will assessment be a problem?

Eli Lilly’s market cap is $885 billion as of this writing. It doesn’t seem like a competition at these levels; the stock could easily cross the $1 trillion mark within a year. But other companies are also close. At least one of them, Berkshire Hathawayis closer, with a market capitalization of $930 billion.

However, the main reason why Lilly could still reach the trillion-dollar club ahead of Berkshire Hathaway and all of its similarly sized peers is the incredible pace of growth that has been a hallmark of the past few years. The company has been growing faster than the likely next cohort of trillion-dollar companies, a group that also includes Taiwan Semiconductors, BroadcomAnd Tesla(Tesla was briefly worth $1 trillion in late 2021, but has not performed well since.)

But what’s the biggest obstacle to a trillion-dollar valuation? Exactly that: valuation. Its forward price-to-earnings (P/E) ratio is 59.01, which is high by almost any measure. The healthcare industry average is 19.1. In other words, any perceived problems in the company could lead to a significant correction in the stock price.

Berkshire Hathaway’s forward PE, meanwhile, is much more reasonable at 19.8. But it’s important to note that many stocks in this cohort don’t look particularly cheap.

It’s important to note that Lilly’s past performance doesn’t guarantee that it will continue to grow faster than every other company within reach of the trillion-dollar mark. That being said, the company’s financial results continue to impress.

In the second quarter, revenue rose 36% from a year earlier to $11.3 billion. Adjusted earnings per share (EPS) rose 86% from a year earlier to $3.92. Lilly also raised its full-year guidance for the second time this year.

Even management, which has more knowledge on the subject than anyone else, underestimates the company’s revenue and profit potential. Shares rose more than 8% after releasing its second quarter earnings report.

And that’s not all. Last year, Lilly sold the rights to Basqimi, a drug that treats hypoglycemia. Excluding the $579 million in revenue generated by the sale of Basqimi rights in the second quarter of 2023, revenue would have increased 46%. The drugmaker also recently won approval for Kisunla, a treatment for early symptomatic Alzheimer’s disease.

The story continues

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