This growth stock could be the next member of the $1trn club

Jon Smith explains his pick to be the next company to be worth $1trn, with a growth stock that’s already up 23% over the past year.

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There are currently seven stocks with a market-cap higher than $1trn. Incredibly, the 5% rally in the Nvidia share price yesterday (5 June) has pushed the market-cap for the chip maker above $3trn. Yet when looking for growth stocks that have the potential to join this illustrious club, I think I’ve found the next contender.

Drum roll please

It might surprise some people that I’m backing Berkshire Hathaway (NYSE:BRK.B) to be the next to hit $1trn. After all, is it a growth stock? I firmly think it is. For example, the stock’s up 23% over the past year and has doubled over the past five years. This is exactly the kind of increase that ticks the box for me.

Granted, it isn’t a small company. It has a market-cap of $885bn as we stand, making it one of the largest stocks globally. I believe that this could increase by another 13% over the coming year, which would take it to the $1trn level for the first time.

One of the key reasons why I think this could happen is due to the nature of the business. It’s fundamentally the investment pot of Warren Buffett. As a result, there isn’t really any limit in how large the company can be worth.

For example, let’s say I run a coffee business. Even if I grow it to be the largest in the world, there’s a cap on how many people like coffee and how much I can sell. Yet with Buffett, he can invest and profit from stocks and increase the portfolio (and business size) year by year. He’s done this in the past and has a strong track record. Even though past performance doesn’t guarantee future returns, it certainly give me a good outlook.

Appealing to investors

Another reason why I think Berkshire could hit the $1trn mark next is investor sentiment. At the moment, tech and artificial intelligence (AI) shares are booming. Yet with the US stock markets at all-time highs, I think later this year stock picking could get a little harder. It won’t simply be as easy as just buying Nvidia shares.

As a result, I think investors will look to buy Berkshire Hathaway stock. As Buffett is still very active in the firm, buying the stock is akin to allowing Buffett to manage my money. His experience and knowledge over many decades could make the stock very appealing.

On the other hand, this could also be seen as a risk. The fact that Buffett is mostly a stock investor means that if we have a stock market crash later this year, the Berkshire Hathaway share price could also plummet. If this is triggered by tech stocks it could be even worse, as Apple is currently the largest holding that he has.

Ultimately, I think Berkshire Hathaway should keep rising towards the $1trn value. When I have some free cash, I think I’ll add it to my portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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