Canadian investors can consider buying undervalued U.S. stocks that are armed with strong fundamentals and trading at a steep discount to consensus price target estimates. The U.S. is the world’s largest economy, providing you with exposure to some of the biggest companies, which lowers overall risk.
Here are two top U.S. stocks you can buy with $3,000 right now.
Public Storage stock
Valued at a market cap of US$48 billion, Public Storage (NYSE: PSA) is a real estate investment trust (REIT) that acquires, develops, owns, and operates self-storage facilities. With a presence in 40 U.S. states, Public Storage has interests in 2,888 self-storage facilities spanning 206 million square feet. It also has a 35% common equity interest in Shurgard Self Storage, a Belgium-based company with 266 self-storage facilities.
Down 35% from all-time highs, the REIT currently offers shareholders a tasty dividend yield of 4.4%. The drawdown in share prices allows you to buy a quality stock at a massive discount and benefit from outsized gains when the markets recover.
Public Storage enjoys a wide economic moat, a loyal customer base, robust occupancy rates, and stable cash flows. Despite an inflationary environment and higher interest rates, the company increased free cash flow to US$2.34 billion in 2022, up from US$2 billion in 2021.
Public Storage is a Dividend Aristocrat and has increased payouts for 31 consecutive years. It has raised dividends by 9.2% annually in the past 30 years.
The company is part of an expanding addressable market as demand for self-storage continues to grow. For instance, its same-store net operating income has risen by 5.3% annually for 19 years. Moreover, the REIT has invested close to US$11 billion in the last four years toward acquisitions and other development projects, increasing its total portfolio by 33%. These investments help Public Storage to grow its cash flow and support dividend hikes.
Priced at 24 times forward earnings, Public Storage is forecast to grow the bottom line by more than 40% between 2023 and 2027. Analysts remain bullish and expect the stock to surge 18% in the next 12 months.
Globe Life stock
Valued at a market cap of US$10.7 billion, Globe Life (NYSE: GL) provides several life and health insurance products as well as annuities to lower and middle-income households in the U.S. In the second quarter of 2023, life insurance accounted for 76% of the total underwriting margin and 70% of total premium revenue. Comparatively, health insurance comprised 24% of insurance underwriting margin and 30% of premium revenue.
While net sales of life insurance were flat year over year in the June quarter, net sales for health insurance surged 12%.
Analysts tracking the stock expect its earnings to increase from US$8.15 per share in 2022 to US$11.35 per share in 2024. So, Globe Life is priced at 10 times forward earnings, which is quite cheap given earnings are forecast to grow by 15% annually in the next five years.
Globe Life also pays shareholders an annual dividend of $0.90 per share, indicating a yield of just 0.80%. But with a payout ratio of 11%, the company has enough room to increase its dividends.
