How Canadian Investors Can Benefit from U.S. Stocks

Canadian investors should consider buying quality tech stocks in the U.S. such as Datadog to benefit from outsized gains.

Canadian investors should consider investing in international markets to increase portfolio diversification and lower overall risk. The world’s largest equity market is located south of the border, which is also the world’s biggest economy.

The U.S. stock market provides investors with exposure to some of the largest companies in the world. Several of these companies earn a significant portion of revenue internationally, resulting in further geographic diversification.

Given these factors, here are three quality U.S. stocks Canadian investors can buy today.

A data center engineer works on a laptop at a server farm.

Source: Getty Images

Datadog stock

One of the fastest-growing tech stocks globally, Datadog (NASDAQ: DDOG) aims to efficiently integrate the tech stacks of enterprises. In a highly digitized world, companies work with multiple data streams that also need to be secured from cyber-attacks.

Datadog provides a portfolio of cloud monitoring products and services that aim to fix these issues. Driven by growing demand, the company increased sales from US$362 million in 2019 to US$1.7 billion in 2022.

Datadog had onboarded 25,500 enterprise clients onto its platform at the end of Q1 of 2023. Around 2,910 customers generate over US$100,000 in annual sales, showcasing the growing need for Datadog’s platform.

The IT data tool maker reported revenue of US$482 million in the March quarter, an increase of 33% year over year. It now estimates it will end 2023 with sales of US$2.1 billion while adjusted earnings are forecast at US$1.19 per share.

Priced at 16 times forward sales, DDOG stock continues to trade at a premium. Yet, it is part of a rapidly expanding market and remains a top long-term investment in July 2023.

Etsy stock

Etsy (NASDAQ:ETSY) owns and operates an e-commerce platform where companies can sell handmade or vintage goods. Shares of Etsy are currently trading 70% below all-time highs valuing the company at a market cap of $10.5 billion.

In recent months, Etsy is wrestling with slowing online sales, lower consumer spending, and elevated inflation levels.

Similar to other tech stocks, the pandemic allowed Etsy to grow sales from US$818 million in 2019 to US$2.3 billion in 2020. But sales are now forecast to grow by just 7.5% to US$2.8 billion in 2023.

Priced at 35 times forward earnings, Etsy stock trades at a premium. But analysts expect it to gain 37% in the next 12 months.

DigitalOcean stock

The final tech stock on my list is DigitalOcean (NYSE: DOCN), a midcap company valued at US$4 billion. With more than 600,000 customers in 190 countries, DigitalOcean is part of the digital economy and helps businesses host websites and develop software.

In Q1 of 2023, DigitalOcean reported sales of US$165.1 million, which was above forecasts of US$163 million. Analysts expect the company to report revenue of US$704 million in 2023, an increase of 22% year over year. Comparatively, adjusted earnings are forecast to rise from US$0.94 per share in 2022 to US$1.69 per share in 2023.

Digital Ocean estimates its addressable market will increase from US$98 billion in 2023 to US$195 billion in 2026, providing it with enough room to expand the top line and deliver substantial returns to investors.

A majority of DigitalOcean’s customers spend just US$15 per month on its platform. But as these businesses scale, spending should increase at an accelerated pace, driving sales much higher over time.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Datadog, DigitalOcean, and Etsy. The Motley Fool has a disclosure policy.

More on Tech Stocks

A chip in a circuit board says "AI"
Tech Stocks

Celestica’s Revenue Jumped 62%, and I Like the Stock’s Outlook

Given its strong financial performance, exposure to high-growth AI infrastructure opportunities, and reasonable valuation, Celestica remains an attractive buy for…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Dividend Stocks

The Next AI Winners May Own Trusted Data: I’d Watch This Canadian Stock

As AI models become widely available, trusted professional data could become a more valuable competitive advantage.

Read more »

Forklift in a warehouse
Dividend Stocks

Apartment Rents Are Slowing: I’d Buy This Canadian REIT Instead

Cooling apartment asking rents make industrial real estate worth another look for investors seeking a different source of monthly income.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

3 Ways to Maximize Your TFSA Before Year-End

Maximize your TFSA before year-end with three different approaches to investing for long-term income and growth.

Read more »

money goes up and down in balance
Dividend Stocks

One $7,000 TFSA Contribution Could Grow Into $50,000: Here’s How Long It Takes

Once the money is inside a TFSA account, a $7,000 investment can become $10,000, $20,000, or considerably more with compounding,…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

Unpopular Opinion: BlackBerry Stock Isn’t All That

Investigate the dramatic rise of BlackBerry stock and analyze the impacts of revenue growth on its performance.

Read more »

moving into apartment
Tech Stocks

Shopify Is Spending to Win AI Shopping: Is the Stock Still Worth the Price?

Shopify is investing heavily in AI commerce while revenue and free cash flow continue growing at impressive rates.

Read more »

diversification and asset allocation are crucial investing concepts
Tech Stocks

I’m Considering Buying More Blackberry Stock Right Now – Here’s my Take

Blackberry stock is posting record results as its QNX segment continues to gain momentum and operating leverage.

Read more »