The key to building long-term wealth is to focus on diversification. You need to buy qualified investments across asset classes such as equities, bonds, exchange-traded funds, and mutual funds. Equity investors need to further diversify their investments by holding stocks across segments and geographies.
For example, Canadian investors can consider allocating a portion of their portfolio towards U.S. stocks. The United States is the largest economy in the world and home to several multi-billion-dollar companies. A majority of these companies generate revenue from multiple global markets, which also helps to account for geographic diversification.
Investors who don’t have the expertise to invest in individual stocks can opt to invest in exchange-traded funds or ETFs such as Vanguard S&P 500 Index ETF (TSX:VSP). This ETF has close to $2.5 billion in assets under management and provides you exposure to the S&P 500 index.
The top holdings of the S&P 500 index include tech giants such as Apple, Amazon, Alphabet, Meta, and Nvidia. In the past six decades, the S&P 500 index has returned 10% annually to investors, allowing them to benefit from inflation-beating gains over time. Moreover, the VSP ETF is hedged to the Canadian dollar, shielding investors from fluctuations in currency rates.
However, Canadians can also derive outsized gains by investing in quality U.S. stocks such as CrowdStrike Holdings (NASDAQ:CRWD) and Coinbase (NASDAQ:COIN). Let’s see why.
Is CRWD stock a good buy right now?
One of the largest cybersecurity companies globally, CrowdStrike offers enterprises a widening portfolio of products and solutions. Its cloud-based Falcon platform has leveraged AI (artificial intelligence) capabilities, enabling end users to better identify and respond to threats.
With a gross retention rate of 98%, CrowdStrike enjoys recurring sales and a steady stream of cash flows. Further, less than 10% of its customers purchased four or more cloud modules from CrowdStrike. Today, 63% of CRWD customers have purchased five or more subscriptions, which indicates higher customer spending.
CrowdStrike is part of a recession-resistant market, as enterprises will continue to allocate resources to protect themselves from cyber-attacks across economic cycles. The rapid increase in the number of connected devices will also act as a tailwind for CrowdStrike in the upcoming decade.
Unlike several other high-growth companies, CrowdStrike reports consistent profits and is forecast to expand earnings by 40% annually in the next five years. Priced at 55.6 times forward earnings, CRWD stock trades 33% below all-time highs.
What is the target price for Coinbase stock?
Among the largest crypto exchanges globally, Coinbase should be on your watchlist if you are bullish on cryptocurrencies such as Bitcoin and Ethereum. Coinbase currently generates a significant portion of its revenue from trading fees and the rest from its subscription services.
Typically, the performance of Coinbase stock is tied to crypto prices as trading volumes surge during bull markets and nosedive when sentiment turns bearish.
While crypto prices are under pressure right now, there are several catalysts for Bitcoin, including the possibility of an upcoming spot ETF and the halving event scheduled in mid-2024.
Down 74% from all-time highs, COIN stock trades at a discount of 12% to consensus price target estimates.
