3 US Stocks to Watch

We’ve examined three US stocks that Australian investors might want to consider putting on their watch lists.

What’s been happening in US markets?

September was yet another dour month for equity markets – the S&P 500 fell 9.3% – marking its largest monthly decline since March 2020. Names like Apple and Facebook that defined the bull run of the last decade have continued to fall, while the U.S. 10 Year Treasury was last at 3.625%.

There are three key thematics at play here:
– inflation continues to run away from the US Fed
– in response to that inflation the Fed has become locked in a rate hike cycle matched in aggression only by the 1980s and lastly,
– geopolitical risk from the Russia-Ukraine war remains persistent and deeply uncertain.

Despite those headwinds, below we look at three interesting stocks that investors might want to put on their watch list in October and beyond.

Top 3 US stocks to Watch

Below we look at three US-listed companies that investors might consider putting on their watch list:

1. Apple (NASDAQ:AAPL)

Apple has seen its share price hold up remarkably well when compared to some of the other big techs in the wake of the 2022 market sell-off, with its shares down ‘just’ 19% year-to-date.

The tech stalwart did however face elevated selling pressure at the end of September, after reports emerged that Apple would be scaling back its iPhone production by about 6 million units, in H2 2022.

While weaker demand for a premium product like the iPhone should hardly come as a surprise based on the current economic environment, the market nonetheless sold down Apple heavily in response – with its stock falling 7.79%, between 26 to 30 September.

Short-term share price fluctuations aside, Apple’s most recent quarterly Q3 earnings highlight why the tech giant continues to be one of the most valuable companies in the world.

As part of those results, the company reported total revenue of US$83.0 billion against earnings of US$1.20 per share. And while segments like the iPhone continue to deliver the lion’s share of revenue for Apple, at US$40.6 billion in Q3, other segments, like Apple’s services segment, continue to grow at double-digits, climbing to US$19.6 billion in the most recent quarter.

Apple will report its next round of quarterly (Q4) earnings on October 27, 2022.

2. Visa (NYSE:V)

If companies like Apple dominate the tech landscape, then it’s companies like Visa which dominante the financial services landscape.

Indeed, despite the deterioration of global macro conditions, Visa’s financial performance remains impressive, with the company growing its top and bottom-line in the double-digits in the last quarter.

Specifically, in Q3, Visa saw its revenue climb 19% to US$7.3 billion, while non-GAAP net income outpaced rose even faster – gaining 33% to come in at $4.2 billion or US$1.98 per share.

In describing those results Visa Chairman and CEO, Alfred F. Kelly, said:

‘Sustained levels of growth in overall payments volume, cross-border volume and processed transactions demonstrated the resiliency of our business model.’

That resiliency is well reflected in Visa shares – they’re down just around 16% year-to-date, holding up better than broad-based indexes like the S&P 500 and even individual equities like Apple.

Analysts continue to like the stock too. According to data from Syfe, Visa has a Buy rating on average and an estimated average price target of US$259.19, implying significant potential upside from where the stock traded on October 5, 2022.

Related article: How to buy US shares in Australia

3.  NVIDIA Corporation (NASDAQ: NVDA)

Of the three companies we discuss in this article, chip maker NVIDIA has faced the most pronounced selling pressure, with its stock down around 56% year-to-date. It also remains the most expensive – trading at 43 times earnings.

In recent news that negatively impacted sentiment around the stock, it was reported that the US government had ordered NVIDIA to stop selling chips used for artificial intelligence and machine learning activities to China. Fortune estimated this ban from the US government could hit the company’s top-line revenue to the tune of US$400 million.

To be sure, in the company’s most recent quarter, NVIDIA’s growth has decelerated dramatically. Quarterly (Q2) revenue came in at US$6.70 billion, up just 3% year-on-year. NVIDIA’s Data Center revenue did maintain heady growth levels, rising 61% during the quarter. Nonetheless, that marks a steep decline from Q1, where the company reported total revenue of US$8.29 billion.

That revenue dip aside, NVIDIA remains well positioned to take advantage of a number of key industries and megatrends, a fact well summarized by founder and CEO, Jensen Huang, who recently said:

‘Accelerated computing and AI, the pioneering work of our company, are transforming industries. Automotive is becoming a tech industry and is on track to be our next billion-dollar business.’

Analysts appear equally optimistic about the company’s future: Wall Street continues to rate NVIDIA a Buy, on average, and the average analyst price target of US$199.45 implies moderate potential upside from where the stock last traded.

Despite the above market gyrations and dramas, in times of uncertainty, it’s important to take a long-term view. As Benjamin Graham wrote in his classic, The Intelligent Investor, ‘This too shall pass.’

*All data correct as of October 5, 2022.

Before you invest

Before investing in any stocks or asset it is important to conduct thorough research, and ensure that the investment aligns with your financial goals and current circumstances. Remember, past performance is not an indicator or future performance. And, if ever in doubt seek the advice of a professional financial adviser.

Cover image source: Kamira/Shutterstock.com