In this article, we take a look at 15 best US stocks for foreigners. If you want to see more best US stocks for foreigners, go directly to 5 Best US Stocks for Foreigners.
Given the United States has the largest economy in the world, many foreigners invest in American stocks. Furthermore, many leading American companies are multinational, giving further geographic exposure and scale.
The United States is also the home to the Federal Reserve, which is the world’s leading central bank. Furthermore, it is home to Wall Street, which is the world’s leading financial center.
Although it is already one of the most developed countries in the world, the United States has a lot of growth potential in the future.
For those of you interested, check out Countries by GDP: 30 Largest Economies in the World.
The United States has substantial population growth potential.
The United States leads in AI which could help produce many innovative breakthroughs that increase domestic and potentially world GDP.
Many multinational American companies also have substantial emerging market operations that could help with earnings growth in the future.
Many leading American blue chips also pay a dividend and also buy back stock when they have excess capital.
Near Term Headwinds
The American economy is slowing currently.
Recently, Silicon Valley Bank, the 16th largest bank by assets in the country, failed in a few days given the bank failed to successfully raise enough equity that it needed and customers withdrew substantial deposits.
Fearing contagion, the U.S. government stepped in to protect deposits at Silicon Valley Bank.
CNBC said, “Banking regulators devised a plan Sunday to backstop depositors with money at Silicon Valley Bank, a critical step in stemming a feared systemic panic brought on by the collapse of the tech-focused institution.”
Although the deposits at Silicon Valley Bank are protected, the equity shareholders of the bank aren’t and the failure worsened confidence in other banks, which could have ripple effects on U.S. economic growth.
With the failure and the higher interest rates, there is potential for the U.S. economy to slow even further and as a result, the near term is pretty uncertain in the United States. Furthermore, if the U.S. dollar weakens versus other currencies, the value of stocks purchased in U.S. dollars could decrease, all else equal.
Despite the near term headwinds which could lead to lower stock prices if economic data fails to meet expectations, the long term potential growth of leading blue chips in the United States is still pretty attractive. The United States has the world’s leading economy, leads the world in innovation currently, and will likely remain the world’s innovation leader in the future. With more innovation, there could be more total value created and many of today’s leading blue chips in America could benefit as a result.
For those of you interested check out 12 Most Promising Future Stocks to Buy.
Given individual companies can fail as Silicon Valley Bank showed and sectors can also underperform, it could be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
Photo by Frans Ruiter on Unsplash
Methodology
For our list of 15 Best US Stocks for Foreigners, we picked 15 stocks with competitive advantages that have headquarters in the United States and that are listed in either the NYSE or the NASDAQ.
We then ranked each stock based on the number of hedge funds in our database of 943 funds that held shares of the same stock at the end of Q4.
15 Best US Stocks for Foreigners
15. BlackRock, Inc. (NYSE:BLK)
Number of Hedge Fund Holders: 49
BlackRock, Inc. (NYSE:BLK) is one of the biggest asset managers in the world that has a lot of scale and competitive advantages. Given the weaker market in 2022 and also dollar appreciation on average AUM, the company’s full year revenue decreased 8% year over year and its full year operating income decreased 13% year over year as adjusted. Full year diluted EPS decreased 13% year over year as adjusted. While the near term could be uncertain this year, BlackRock, Inc. (NYSE:BLK) has a very strong franchise and long term growth potential. Shares currently trade for a forward P/E of 15.98 as of March 14. Of the 943 hedge funds in our database, 49 owned shares of BlackRock, Inc. (NYSE:BLK) at the end of Q4.
14. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 62
The Home Depot, Inc. (NYSE:HD) is one of the leading home improvement retailers in the world. While the company’s customer base has been fairly resilient for most of fiscal 2022 with less price sensitivity than what would normally be expected given the persistent inflation, the company’s fourth quarter 2022 comparables were slightly softer than anticipated. Given the rising interest rates and the potential for an economic slowdown, the company expects weaker demand in the near term as well. In February, The Home Depot, Inc. (NYSE:HD) said it saw FY23 revenue flat, and FY23 EPS down mid-single digits percentage range. Nevertheless, The Home Depot, Inc. (NYSE:HD) has growth potential in the long term given the rising equity value of the total homes in the United States.
13. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 66
Walmart Inc. (NYSE:WMT) is one of the leading discount retailers in the world with substantial scale. In fact, as of the end of FY2022, the company operated 10,635 total retail units globally, with 4,717 Walmart stores in the United States and 5,318 Walmart International stores. Walmart Inc. (NYSE:WMT) also had 600 Sam’s Club stores in the United States. With its scale, Walmart Inc. (NYSE:WMT) has been able to invest in technology and bargain with suppliers to offer its consumers very competitive prices and still realize substantial profits. For FY23, which is the 52 week period ending January 27, 2023, Walmart Inc. (NYSE:WMT) had adjusted EPS of $6.29 and the company returned $16 billion to shareholders through dividends and share repurchases.
12. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 68
Lowe’s Companies, Inc. (NYSE:LOW) is a leading home improvement retailer that like The Home Depot, Inc. (NYSE:HD) is facing near term softness in demand. In Q4 2022, for instance, Lowe’s Companies, Inc. (NYSE:LOW)’s comparable sales declined 0.7% year over year and the company sees FY23 comparable sales flat to down 2% year over year. While the company thinks there could be a ‘slight decline’ in the home improvement market in 2023, Lowe’s Companies, Inc. (NYSE:LOW) believes the long term outlook for the home improvement market is still strong given aging homes and the rising value of total homes.
11. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 71
NIKE, Inc. (NYSE:NKE) is a leading sport apparel maker that has faced headwinds such as foreign exchange and inventory challenges in the near term. Nevertheless, the company also has long term tailwinds such as the increasing cultural shifts to health and wellness which could increase demand for the company’s apparel products. NIKE, Inc. (NYSE:NKE) also has competitive advantages such as strong brands and scale. 71 hedge funds in our database owned shares of NIKE, Inc. (NYSE:NKE) at the end of Q4, ranking the stock #11 on our list of 15 Best US Stocks for Foreigners.
10. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 74
The Procter & Gamble Company (NYSE:PG) is a leading consumer staples company that hasn’t done very well given the difficult cost and operating environment partially as a result of the higher inflation. Nevertheless, The Procter & Gamble Company (NYSE:PG) benefits from China opening up and the company said in January it expects to pay around $9 billion in dividends and to repurchase $6 billion to $8 billion of shares in fiscal 2023. In the long term, The Procter & Gamble Company (NYSE:PG) is still attractive given its strong brands and potential earnings power if inflation eventually normalizes.
9. Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 74
Goldman Sachs Group, Inc. (NYSE:GS) ranks #9 on our list of 15 Best US Stocks for Foreigners given 74 hedge funds in our database owned shares of the leading investment bank at the end of Q4. Given the company’s headwinds in the consumer sector, Goldman Sachs Group, Inc. (NYSE:GS) has narrowed its ambitions in consumer strategy and it is in the process of ceasing to offer new loans on the Marcus platform according to the company in January 2023. Going forward, Goldman Sachs Group, Inc. (NYSE:GS) hopes to grow its wealth and asset management business which generated $8.8 billion in management and other fees in 2022 and is expected to generate over $10 billion in management and other fees in 2024.
8. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 84
Johnson & Johnson (NYSE:JNJ) is a leading healthcare company that has faced headwinds given inflation and higher interest rates which have led to some lower valuations for leading stocks. In terms of the future, the company is making progress in its planned separation of its consumer health business which is expected to be completed sometime this year. In full year 2021, Johnson & Johnson (NYSE:JNJ)’s consumer health segment generated sales of $14.6 billion, giving it fairly substantial scale. With the spin off, the two businesses have the potential to grow faster. In the long term, Johnson & Johnson (NYSE:JNJ) still has a high quality business with growth potential.
7. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 99
The Walt Disney Company (NYSE:DIS) is a leading entertainment company that has a forward P/E ratio of 16.97 as of March 14 given an economic slowdown could negatively affect the company’s near term growth potential. In the long term, however, The Walt Disney Company (NYSE:DIS) has strong growth potential given increasing consumer incomes, the company’s strong entertainment brands, growth in the metaverse, and also potential growth in Disney+. In terms of Disney+, The Walt Disney Company (NYSE:DIS) CEO Robert Iger recently said, “In our zeal to grow global subs, I think we were off in terms of that pricing strategy, and we’re now starting to learn more about it and to adjust accordingly,” meaning the company could potentially raise prices. For those of you interested, check out 10 Most Promising Metaverse Stocks to Buy.
6. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 100
JPMorgan Chase & Co. (NYSE:JPM) is one of the big four American banks. Although its shares declined recently given the failure of Silicon Valley Bank which weakened confidence in the financial system, JPMorgan Chase & Co. (NYSE:JPM) has likely attracted substantial more deposits and more business as a result of the failure. With the growth in deposits, JPMorgan Chase & Co. (NYSE:JPM) has more earnings growth potential in the long term. 100 hedge funds in our database owned shares of JPMorgan Chase & Co. (NYSE:JPM) at the end of Q4, ranking the stock #6 on our list of 15 Best US Stocks for Foreigners.
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Disclosure: None. 15 Best US Stocks for Foreigners is originally published on Insider Monkey.
