Investing in U.S. stocks offers a number of benefits for Canadians. First, you get access to the world’s largest economy. Second, these companies derive a significant portion of sales from international markets, providing investors with diversification. Further, the best companies have managed to consistently grow earnings over time and have managed to deliver outsized gains to long-term investors.
I have identified three such U.S. stocks that Canadian investors should consider right now.
Broadcom stock
A highly profitable tech stock, Broadcom (NASDAQ:AVGO) is valued at a market cap of US$343 billion. In the fiscal second quarter (Q2) of 2023 (ended in April), Broadcom reported sales of US$8.7 billion, an increase of 8% year over year.
It has a long-standing chip supply agreement with Apple (NASDAQ:AAPL), allowing Broadcom to enjoy steady cash flows. The company is also well positioned to benefit from the artificial intelligence (AI) mega-trend, as AI chips accounted for 10% of semiconductor sales in Q2. This figure might rise to 15% by the end of fiscal 2023 and to 25% by 2024.
In the last 10 years, AVGO stock has returned a whopping 2,770% to shareholders after adjusting for dividends. It currently pays investors an annual dividend of US$18.40 per share, indicating a yield of 2.2%. Between fiscal 2016 and fiscal 2023, these payouts have risen at an annual rate of 38%.
In the last 12 months, Broadcom’s free cash flow margin stands at an impressive 49%, allowing it to reinvest in growth, pursue accretive acquisitions, solidify its balance sheet, and increase dividend payouts.
Apple stock
The largest company in the world, Apple is valued at a market cap of almost US$3 trillion. Armed with multiple billion-dollar revenue streams, Apple leads several business segments, such as smartphones, tablets, and wearables. The iPhone, though, still accounts for 54% of total sales.
Despite its massive size, Apple has increased adjusted earnings at an annual rate of 23.6% in the last five years, showcasing its pricing power.
The Services segment is Apple’s second-largest business, and its sales were up 14% year over year in fiscal 2022. This business includes multiple subscription-based offerings such as Apple Care, Apple TV+, Arcade, News+, Apple Music, and more. Due to its asset-light model, the profit margins for Services stand at 70% compared to 36% in the hardware segment.
Apple continues to expand its portfolio of products and services and recently announced the launch of Vision Pro, a virtual reality/augmented reality headset.
CrowdStrike stock
The final U.S. stock on my list is CrowdStrike (NASDAQ:CRWD), a major player in the cybersecurity space. CrowdStrike has estimated its total addressable market to touch US$98 billion in 2026, providing it with enough room to grow sales, given revenue stood at US$2.24 billion in fiscal 2023 (ended in January).
Moreover, the company’s annual recurring revenue, or ARR, in fiscal Q1 of 2024 rose by 24% year over year to US$2.73 billion. Cybersecurity is a crucial part of enterprise spending, given the threat of digital attacks globally, making CRWD stock a top investment in 2023 and beyond.
CrowdStrike also offers enterprises a generative AI-powered cybersecurity solution to automate the threat detection process, which should reduce overall costs and increase customer engagement rates.
Down 51% from all-time highs, CRWD stock is priced at a discount of 24% to consensus price target estimates.
