Every month, we ask our freelance writers to share their top US stocks with investors — here’s what they would like to buy for October!
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Alphabet
What it does: The owner of both Google and YouTube, Alphabet is one of the largest technology companies in the world.
By Edward Sheldon, CFA. Alphabet (NASDAQ: GOOG) shares have had a great run in 2023. Yet I remain very bullish on them.
Alphabet is doing some amazing things in the artificial intelligence (AI) space right now. Recently, it rolled out Bard – its answer to ChatGPT. This appears to have enormous potential (it can now respond with real-time info from Google Maps, Flights, and Hotels).
Meanwhile, the group continues to have a lot of success with YouTube. Today, around five billion YouTube videos are watched every single day.
Additionally, the company is seeing strong growth in its cloud computing division. In Q2, revenues here were up 28% year on year.
The company’s valuation remains quite low by ‘Big Tech’ standards, however. At present, Alphabet has a forward-looking price-to-earnings (P/E) ratio in the low 20s. I think there’s a lot of value on offer at that multiple.
There are a few risks to be aware of here including regulatory fines, competition from rivals, and a downturn in advertising spending.
All things considered, however, I think the stock looks attractive at present.
Edward Sheldon owns shares in Alphabet.
Axon Enterprise
What it does: Axon is a leading defence company working closely with US, UK, and Canadian law enforcement to improve safety and efficiency.
By Zaven Boyrazian. The law enforcement industry in the US and UK continues to undergo a radical technological shift. Companies like Axon Enterprise (NASDAQ:AXON) are creating novel methods to provide non-lethal firearm alternatives as well as solutions for faster and more efficient response times.
Over the last 30 years, the company has built strong relationships with an estimated 95% of law enforcement agencies in the US. And even the London Metropolitan Police have started adopting the group’s devices and services.
Axon is most prominently known for its TASER devices. However, management has been busy diversifying. And today, the lion’s share of revenue actually comes from cloud-based software solutions to help with record keeping, evidence management, and real-time response.
Of course, with such sensitive data moving through the platform, potential cybersecurity breaches pose a significant threat. Apart from the reputational impact, it could encourage law enforcement agencies to start exploring alternative or in-house solutions.
Nevertheless, given the stock’s impressive track record and monopolistic traits, it’s a business worth buying today, in my opinion.
Zaven Boyrazian does not own shares in Axon Enterprise.
Shopify
What it does: Shopify is an e-commerce company that helps small firms build an online store and sell online through one streamlined dashboard.
fool_stock_chart ticker=[NYSE:SHOP]
By Matthew Dumigan. I’m convinced that among the best US stocks to buy in October is Shopify (NYSE:SHOP).
After recently reporting revenues up 31% year over year and positive cashflow for the third consecutive quarter, the company is gaining some serious business momentum.
Shopify is successfully shipping products faster and expanding its global merchant base while simultaneously improving its ability to generate greater free cash flow.
That said, there’s no hiding from the fact that it will continue to be tough for Shopify to compete against current and future competitors. Nonetheless, I’m confident that the platform’s customisation and promotional tools go a long way in setting it apart from rivals such as Amazon.com.
Finally, recessionary fears and weaknesses in consumer spending have caused the company’s share price to remain significantly below its previous high. As a result, I think Shopify represents a great long-term investment opportunity at today’s price.
Matthew Dumigan does not own shares in Shopify.
TransMedics Group
What it does: TransMedics Group is a medical technology company that provides hospitals with its organ care system (OCS).
By Muhammad Cheema. There are currently 103,000 people in the US on the national transplant waitlist. Each day 17 people die while waiting.
TransMedics Group (NASDAQ:TMDX) greatly improves the organ transplantation process. Its OCS keeps organs fresh by pumping them full of warm oxygenated blood.
It has also created an OCS programme. This takes over the whole process from organ retrieval to transportation, allowing transplant centers to focus on patient care.
The OCS programme is much better than the status quo and demand is soaring as a result. Second quarter revenue increased 156% year on year (YoY) to $56m. TransMedics is also edging closer to profitability, as its net loss narrowed from $11.5m to $1m YoY in the same period.
Having said that, TransMedics shares are trading at a price-to-sales ratio of 12. This is concerning as it’s very expensive. However, I analyse stocks through a long-term perspective and I believe TransMedics is growing fast enough to justify this.
Muhammad Cheema owns shares in TransMedics.