US markets are roaring – and so is the BizNews stock market portfolio

The world's biggest companies in the US are enjoying an exciting ride upwards on the stock markets, with tech giants Apple, Amazon and Microsoft leading the way. Alphabet – Google's owner – joined the companies that are worth more than $1trn in market capitalisation in the powerful rally at the start of 2020. The value of each of these companies is worth more than the Gross Domestic Product of many countries, including that of South Africa, with only about 16 countries exceeding $1trn, according to World Bank data. The good news for BizNews webinar attendees is that these stocks were identified as opportunities. The next BizNews investment webinar is on January 28, 12.30 SA time, for BizNews Premium subscribers who are investigating their global investment opportunities. Alec will be dissecting the details of these shares and other interesting stock market ideas. Sign up now to join the discussion. – Jackie Cameron ___STEADY_PAYWALL___.Alphabet becomes fourth US company to reach $1trn market value.By Amrith Ramkumar(The Wall Street Journal) – Google parent Alphabet became the fourth US company ever to achieve a $1trn market value Thursday, punctuating a powerful rally in shares of large internet stocks to start 2020.The search-engine giant joins peers Apple, Amazon.com and Microsoft as the only firms to reach the threshold during intraday trading. Apple and Amazon accomplished the feat in the summer of 2018, while Microsoft hit $1trn for the first time in April of last year. Amazon never closed above $1trn and has fallen well behind Apple and Microsoft, which have rocketed past that level recently.The massive gains for technology stocks come with Silicon Valley companies ascending to the forefront of the world economy and flexing their muscles in new arenas such as health care and transportation. Despite concerns about stricter regulatory scrutiny, the biggest technology companies have continued soaring in value, highlighting how investors favor firms that steadily improve sales in a world with tepid economic growth and low interest rates.Google faces investor concerns about antitrust probes into its dominance in advertising and rising costs. Those worries have put Alphabet shares behind the pace of many of its technology peers in the past year, but many investors remain confident the company can continue growing consistently."Google is one of those critical, important leaders in multiple areas," said Michael Lippert, who manages the Baron Capital Opportunity Fund that counts Alphabet among its largest holdings. "You almost can't live your life without Googling things."Alphabet shares have surged since the company said in early December that Google co-founders Larry Page and Sergey Brin were stepping down from managing the parent company and ceding control to Google Chief Executive Sundar Pichai. Analysts have suggested Mr. Pichai could further buoy the stock either by increasing buybacks or potentially instituting a dividend payment for the first time in the company's history because a chunk of his bonus is tied to share performance.That anticipation has helped fuel gains ahead of the company's fourth-quarter earnings report, which is scheduled for early next month. Citing a potential "shareholder-friendly" approach from Mr. Pichai, Deutsche Bank analysts recently raised their price target on Alphabet shares to $1,735, which would mark a roughly 20% increase from their Thursday level.Even shares of smaller companies seen as disruptive and having outsize growth potential have soared in the new year, including electric-auto maker Tesla and plant-based meat-alternative maker Beyond Meat. The broad gains have helped drive major indexes to records.Read also: Wealth building 2020: Warning – US stock market shows signs of millennial lunacy.Although Alphabet has had to combat rising costs, the resilience of its core online advertising business has continued to buoy the stock."It's really been a cash cow," said Dan Morgan, a senior portfolio manager who focuses on tech at Synovus Trust Co., which owns Alphabet shares. "They've been steadily continuing to post 15% to 20% growth, which is pretty amazing when you consider how mature that model is."Alphabet's Class A shares advanced 0.8% Thursday, combining with a rally in its Class C shares, which carry no voting rights, to lift the company's market value above $1 trillion at the end of Thursday's session. The Class A shares are up 33% in the past year, exceeding a 27% rally in the S&P 500.The largest five companies in the S&P 500 – Apple, Microsoft, Alphabet, Amazon and Facebook – now account for about 19% of the index in terms of weighting. Five years ago, the largest five components in the broad equity gauge made up 12%, illustrating the growing dominance of a handful of the biggest tech stocks."When growth is scarce, investors are willing to pay up for any company that's able to deliver," said Amanda Agati, chief investment strategist at PNC Financial Services Group. "It's been a very long, slow, sluggish economic growth cycle."Apple is now approaching a $1.4trn market cap, while Microsoft is at $1.27trn and Amazon is at $931bn. Facebook stands at $633bn.The concentrated gains have fuelled concerns that a pullback in the leading tech shares could drag down the entire market. But major indexes have shaken off brief selloffs in recent years to rally to records. The S&P 500 just logged its biggest annual gain since 2013 with trade tensions receding and interest rates around the world falling.Following years of steady returns, investors also are debating whether the largest internet stocks have gotten too pricey. Alphabet shares trade at 31 times the company's earnings in the past year, in line with its 10-year average. Microsoft has a similar valuation, while Apple trades at 26.5 times earnings and the S&P 500 at 22 times. Other popular internet stocks Amazon and Netflix have valuations north of 80.Alphabet was created in 2015 when Google formed a new parent company to separate its core business from a host of other segments focused on everything from robotics to self-driving cars. The firm has benefited from its acquisitions of YouTube and internet advertising company DoubleClick Inc. more than a decade ago and made more deals since to create a dominant digital ad machine.Google went public in August 2004, making its time as a public company and rally to a $1trn market value much shorter than that of other technology giants. Apple and Microsoft became public companies in the 1980s, while Amazon's initial public offering took place in 1997.It has taken Alphabet only a few months to boost its market capitalisation – calculated by multiplying its share count for each class of shares by the price – from $900bn to $1trn. That marks the company's fastest such $100bn advance, according to Dow Jones Market Data. Alphabet took almost two years to go from $800bn to $900bn in November.– Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

US markets are roaring – and so is the BizNews stock market portfolio

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