Canadian investors should buy U.S. stocks to benefit from diversification. Moreover, the U.S. is the world’s largest market, and several S&P 500 companies generate revenue across geographies, which lowers overall risk.
Here are three top U.S. stocks Canadian investors should consider buying in July 2023.
Image source: Getty Images
Tesla stock
The largest electric vehicle manufacturer globally, Tesla (NASDAQ:TSLA) is valued at a market cap of US$830 billion. TSLA stock has already returned 3,230% to shareholders in the last 10 years, outpacing the broader markets by a wide margin. However, shares of the EV giant are also down 35% from all-time highs, allowing you to buy the dip.
Despite its massive size, Tesla increased vehicle deliveries by 83% year over year to 466,140 units in the second quarter (Q2) of 2023, as the company ramped up production at its Texas-based assembly plant.
Due to its market-leading position and first-mover advantage, Tesla also enjoys robust profit margins. For example, its sales in the last 12 months stood at US$86 billion, while free cash flows were close to US$5.8 billion. Comparatively, Ford reported a free cash flow of US$3.46 billion compared to sales of US$165 billion in the past four quarters.
But Tesla is not immune to macro challenges. For example, its inventory has risen from US$4.3 billion to US$14.4 billion in the last two years. Due to an inflationary environment, Tesla is also wrestling with narrowing operating margins.
MongoDB stock
Shares of enterprise-facing cloud-based company MongoDB (NASDAQ:MDB) have more than doubled year to date. Valued at a market cap of US$29 billion, MongoDB stock is priced at 18.7 times forward sales, which is quite steep. But the company is on track to expand adjusted earnings from US$0.81 per share in fiscal 2023 to US$2.11 per share in fiscal 2024.
MongoDB is well positioned to benefit from the growing demand for customized software solutions that aim to improve efficiencies and create additional revenue streams for corporates.
The company is among the most popular database entities globally, which supports the developer community. So, it is a top choice for mobile applications, e-commerce platforms as well as social media companies.
MDB stock has surged over 1,200% since its IPO (initial public offering) in October 2017. It remains a solid long-term investment for investors in 2023.
The Trade Desk stock
The final U.S. stock on my list is The Trade Desk (NASDAQ:TTD). Valued at US$38 billion by market cap, TTD stock has returned 2,470% to shareholders since its IPO in 2016. Operating in the ad-tech space, TTD should benefit from multiple secular tailwinds in the upcoming decade.
First, digital ads will account for 58% of total ad spending in 2023. Second, programmatic advertising is the fastest-growing segment, which should increase demand for TTD’s portfolio of products and solutions.
Finally, The Trade Desk continues to focus on widening its product suite. Last month, it launched an AI-powered media buying platform called Kokai, which allows marketers to purchase optimized ad impressions at the best price.
Priced at 65 times forward earnings, TTD stock is expensive. But its adjusted earnings are forecast to rise by 24% annually in the next five years.
