Many Canadian investors are aware of the importance of portfolio diversification. One way that Canadians implement that concept into their portfolios is by investing in exchange-traded funds (ETFs). One of the most popular ETFs for diversification may be SPDR S&P 500 ETF Trust (NYSEMKT: SPY). Commonly known as SPY stock, this ETF tracks the performance of the S&P 500, which is an index that includes 500 large American companies.
For what it’s worth, I think investing in SPY stock could be great. Personally, I use it for diversification as well. However, in the grand scheme of things, it accounts for a small proportion of my portfolio. That’s because I know that investing in individual stocks could allow me to beat the S&P 500 by a wide margin. In my opinion, investors don’t even need to invest in very risky companies to beat the S&P 500. No, you could invest in solid companies that you’re very familiar with and do very well.
In this article, I’ll discuss two American companies that Canadians should consider investing in today. These are two household names that I think could lead their respective industries for decades to come.
One of the biggest names in the world
When I think of the American stock market, the first thing that comes to mind is how many exceptional tech companies an investor can choose from. My favourite American tech company is, without a doubt, Microsoft (NASDAQ: MSFT). This is a company that needs no introduction. It’s estimated that Microsoft’s Windows operating system accounts for a 70% share of the operating system market. If that’s not the type of market dominance investors are looking for, then I’m not quite sure what is.
Microsoft also offers a wide range of other products and services, including but not limited to Office, Xbox, and Azure. This wide range of products has allowed Microsoft to continue widening its reach and increasing its presence within the consumer market. As a result, Microsoft stock has only continued to climb over the past decade. Since January 2013, Microsoft stock has gained more than 230%! I believe this stock still has a lot of room to grow. Canadians should consider adding this stock to their portfolios today.
Unlike any other retail company
The American stock market also features many very well-known retail companies. Among them is Costco (NASDAQ: COST), my favourite retail company by far. What investors should realize about Costco is that it isn’t like all of the other retail companies out there. Costco doesn’t make most of its revenue by marking up its products. In fact, it tries to keep prices as low as possible for consumers, using those low prices to lure people into their stores.
No, Costco makes its money through its membership program. You need a Costco membership if you want to take advantage of its wide selection of products and low prices. This business model has proven to be very successful over the years. Over the past five years, Costco stock has gained a very impressive 232%, as of this writing. With much of the world still considered uncharted territory for this company, I think Costco could continue to grow and bring its business model to new places in the future.
