Albert noted over the weekend that the portfolio suggested in our advice for a new investor post consisted exclusively of large and mega-cap stocks (>$20B market cap).
| Name | Ticker | Mkt Cap | Mkt Cap |
| Shopify Inc | SHOP | 108.80 B | LARGE |
| Docusign Inc | DOCU | 36.04 B | LARGE |
| Tesla Inc | TSLA | 278.21 B | MEGA |
| Twilio Inc | TWLO | 33.41 B | LARGE |
| Zoom Video Communications Inc | ZM | 69.55 B | LARGE |
| Intuitive Surgical, Inc. | ISRG | 75.89 B | LARGE |
| Mercadolibre Inc | MELI | 47.96 B | LARGE |
| NextEra Energy Inc | NEE | 134.78 B | LARGE |
| Illumina, Inc. | ILMN | 56.40 B | LARGE |
| Netflix Inc | NFLX | 216.82 B | MEGA |
| Walt Disney Co | DIS | 214.31 B | MEGA |
| Amazon.com, Inc. | AMZN | 1,477.36 B | MEGA |
| Alphabet Inc Class C | GOOG | 1,036.47 B | MEGA |
| Mastercard Inc | MA | 305.20 B | MEGA |
This is likely to be the right approach for a new portfolio, you’d generally expect companies of this maturity and size to be less volatile than their small-cap and mid-cap peers, but it’s fair to say that the opportunity for multiples of growth is similarly somewhat limited.
As a bit of a thought exercise, we thought we’d put together a similar portfolio of small-cap and mid-cap stocks only, those with a market cap <$20B. Traditionally you’d consider >10B to be a large-cap, but we do feel the standard accepted definitions are less relevant these days – albeit you might consider this opinion itself to be a prime example of how valuations have got out of step with reality!
Anyway, putting definitions aside, the challenge was to agree on a top-ten of companies with a market cap under $20B, and a significant upside potential over the five-year timeframe.
It feels rather subjective to try to assign a risk rating to these as we did in the previous posting, they’re all high risk, and probably not advisable for a new investor, except perhaps to learn a few skills around better understanding smaller companies and enduring wild volatility (and of course also as a bit of fun in an otherwise fairly solid diversified portfolio).
| Name | Ticker | Mkt Cap | Mkt Cap |
| Beyond Meat Inc | BYND | 7.98 B | MID |
| Teladoc Health Inc | TDOC | 17.99 B | MID |
| Editas Medicine Inc | EDIT | 1.97 B | SMALL |
| Fastly Inc | FSLY | 8.04 B | MID |
| Guardant Health Inc | GH | 8.15 B | MID |
| Trade Desk Inc | TTD | 19.94 B | MID |
| Solaredge Technologies Inc | SEDG | 8.52 B | MID |
| HubSpot Inc | HUBS | 9.60 B | MID |
| Cognex Corporation | CGNX | 10.91 B | MID |
| Zscaler Inc | ZS | 15.70 B | MID |
We are tracking both lists, so it will be interesting to see how each portfolio performs against the market over the next few years, and of course how their performance compares to our own real investment portfolios over the same period!
As I look back over both lists today, there are a couple of stocks that I don’t currently own and probably should, notably Twilio, NextEra Energy, Fastly, The Trade Desk, Solaredge Technologies, Hubspot, and Cognex. They’re all on my watch-list for potential buying opportunities if the market does take a hit over the next few months and I become a net buyer of stocks once again – and a couple of these play quite nicely into the Biden climate plan that I reviewed a few days ago in this post.
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