TFSA Investors: 2 U.S. Tech Stocks to Buy and Hold Forever

U.S. stocks such as CrowdStrike and Datadog have the potential to outpace the broader markets and derive inflation-beating returns.

Aditya Raghunath

Author Bio Aditya Raghunath is a financial writer and equity researcher who has spent more than a decade exploring investing and personal finance. Recognizing how complex financial markets can feel to everyday investors, he turned to equity research and financial journalism to help readers make informed decisions through clear, data-driven analysis. His work has been featured on financial platforms including Benzinga, Barchart, TIKR, and TheStreet.com. Aditya focuses on helping investors identify resilient businesses with durable competitive advantages, strong cash flows, and the potential to compound wealth over the long term. Outside of financial research, Aditya enjoys travelling with his family, exploring new cultures, and following global economic developments. Education Master's degree in Finance and Marketing Areas of Expertise Canadian and U.S. equities, growth and value stocks, dividend investing, dividend sustainability, portfolio strategy, asset allocation, exchange-traded funds (ETFs), long-term compounding, macroeconomic trends, interest rates, inflation, and sector rotation. Social Media Profiles LinkedIn Favorite Investment Quote "The stock market is a device for transferring money from the impatient to the patient." — Warren Buffett

Published October 1, 2023 9:00 am EDT

The key to building wealth is diversification of your investment portfolio. You need to hold multiple asset classes that include bonds, gold, and equities, which, in turn, lowers your risk significantly. Even while investing in the stock market, you need to hold a basket of stocks across multiple sectors.

For instance, no single stock should account for more than 5%, and no single sector should account for more than 25% of your equity portfolio, according to financial experts. You can further diversify your holdings by investing in stocks in the U.S., which is also the largest economy in the world.

Here are two U.S. tech stocks you can buy and hold forever in your TFSA.

A data center engineer works on a laptop at a server farm. — Source: Getty Images

CrowdStrike stock

One of the hottest tech stocks south of the border, CrowdStrike (NASDAQ: CRWD) has leveraged its artificial intelligence (AI) capabilities to benefit from a competitive moat. CrowdStrike offers a wide portfolio of cybersecurity solutions to enterprises. Given the increasing number of cyber threats and associated vulnerabilities, CrowdStrike is well poised to benefit from a rapidly expanding addressable market.

It has 10 years of data sets, which CrowdStrike uses to train its machine learning models and gain a significant advantage over peers. As the company continues to expand its customer base, its AI platform should become more robust, thereby creating a flywheel effect and improving customer engagement rates.

While enterprise spending has lowered in recent months, CrowdStrike increased revenue by 37% year over year in the fiscal second quarter (Q2) of 2024 (ended in July). Around 31% of its sales are generated from the international market, which grew by 43% in Q2.

CrowdStrike ended Q2 with sales of $732 million while adjusted net income more than doubled to US$180 million. It reported an operating cash flow of US$245 million and a free cash flow of US$189 million.

The company ended the July quarter with a dollar-based net retention rate of 120%, which suggests existing customers increased spending on the CrowdStrike platform by 20% in the past year.

With a total addressable market of US$76 billion, CrowdStrike has enough room to grow its top line in the upcoming decade.

Datadog stock

Datadog (NASDAQ: DDOG) offers an enterprise-facing cloud observability platform and is valued at a market cap of US$29 billion. Datadog stock fell more than 19% in a single trading session last month after it lowered revenue guidance for 2023.

Datadog reported sales of US$509.5 million in Q2, an increase of 25.4% year over year, while adjusted net income stood at US$0.36 per share. However, it forecast 2023 sales between US$2.05 billion and US$2.06 billion, below its previous guidance of between US$2.08 billion and US$2.1 billion.

However, Datadog forecasts net income per share between $1.30 and $1.34 in 2023, higher than previous estimates of $1.13 and $1.20 per share. We can see that Datadog continues to benefit from economies of scale and is on track to increase earnings by 32% annually in the next five years.

Priced at 54 times forward earnings, DDOG stock might seem expensive. But analysts remain bullish and expect shares to increase by 20% in the next 12 months.