3 cheap US stocks that are buys
One of the best things retail investors can do is refrain from buying stocks unless they are undervalued. This act alone can greatly increase their returns in the long run. All it takes is patience and an eye for quality inventory.
If you find that the number of dumped stocks in Canada is decreasing, you are not alone. Stocks fell off the value radar as the stock market climbed 82% from pandemic market crash levels.
Fortunately, we have the freedom to easily invest in US stocks through our online brokers. Even though the US stock market is also trading near its all-time high, exploring south of the border significantly expands the pool of undervalued stocks you can buy.
Here are some good, inexpensive US stocks to check out.
In addition to our major Canadian banks and insurance companies, Canadian investors can diversify into Visa (NYSE: V) for another holding in the financial services industry. Visa is widely recognized as the largest payment processor on Earth. It operates in over 200 countries, offering the convenience of using digital currency instead of bulky cash or checks.
In addition, it is one of the highest quality companies in the world. The company made its initial public offering in March 2008. It was unhappy for the company but happy for global investors that the stock was hit by the Great Recession, triggered by the global financial crisis. In early 2009, investors could have picked quality stocks in the bear market and pocketed annualized returns of around 26%, essentially more than an 18-bagger in a strong company. Even if an investor had just bought the stock five years ago, in 2016 they would still see massive total returns of around 23% per year.
What makes Visa a top quartile company are its strong profits. Its Adjusted Earnings Per Share (EPS) has grown in double digits every year since fiscal 2008, with the exception of fiscal 2020 when it was down 7% due to the impacts of the pandemic. . The resumption of a double-digit growth rate combined with an undervalued stock, buyers of Visa shares are now expected to generate disproportionate returns, with below-average risk, over the long term.
Our railroad stocks, such as Canadian National, have been excellent long-term outperformers. Canadian investors can further diversify the industrial portion of their portfolio by adding Lockheed Martin (NYSE: LMT).
Lockheed is an aerospace and defense company primarily engaged in aeronautics, missiles and fire control, rotary and mission systems, and space. Stock provides more immediate income than railroad stocks. Specifically, the undervalued US stock offers a return of 3%.
Additionally, Lockheed tends to report stable profits throughout market cycles. Last year it saw net sales growth of 9% while its adjusted EPS increased 12%. Unsurprisingly, it also tends to increase its dividend over time and has done so every year since 2003. For reference, its five-year dividend growth rate is 9.8%. I expect another dividend increase later this month in the 5-9% range. Low-risk stock offers a potential total return of around 10-15% per annum over the next five years.
Like the stocks of Canadian railways, Global payments (NYSE: GPN) is a growth stock in the industrial sector. Its 10-year rate of return is approximately 22% per year. What’s phenomenal is that Global Payments Adjusted EPS has steadily increased every year since 2002 through the global financial crisis and the pandemic of last year.
Global Payments is a leading payment technology company providing payment and software solutions to approximately 3.5 million merchants, primarily small and medium-sized, and more than 1,300 financial institutions in over 100 countries . It should benefit from the continued transition to card, electronic and digital payments.
Last year, it generated around 84% of its revenue in the Americas and only 13% and 3%, respectively, in Europe and the Asia-Pacific region. Therefore, there is room for further penetration into emerging markets.
In addition, Global Payments’ strategic mergers and acquisitions activities, including Heartland in 2016 and Total System Services in 2019, have rapidly increased the size of the company. Its 12-month revenue of nearly US $ 8 billion is more than double what it was in 2018. The correction of around 24% year-to-date makes US stock good market a good buy.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
The Motley Fool owns shares and recommends Visa. The Motley Fool recommends Canadian National Railways and Lockheed Martin. Foolish contributor Kay ng owns shares of Global Payments and Lockheed Martin.