Every month, we ask our freelance writers to share their top US stocks with investors — here’s what they rate highly for May!
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Berkshire Hathaway
What it does: Berkshire Hathaway is a diversified conglomerate including insurance, utilities, and railroad operations.
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By Stephen Wright. Despite the US stock market looking slightly expensive at the moment, one stock stands out to me as a buying opportunity. It’s Berkshire Hathaway (NYSE:BRK.B).
When I’m looking for shares to buy, the most important thing is a business that has a long-term competitive advantage. And Warren Buffett’s company fits the bill.
Berkshire’s subsidiaries operate in a number of regulated industries, including insurance, utilities, and railroads. And as Buffett pointed out, this brings risk as regulators aren’t always predictable.
Nonetheless, all three are businesses where demand is highly predictable, even if regulation isn’t. And the barriers to entry for competitors are extremely high.
Trading at a price-to-book (P/B) ratio of 1.57 while earning a return on equity in excess of 18%, I think the stock is good value. That’s why its my largest stock investment and one I plan to continue buying.
Stephen Wright owns shares in Berkshire Hathaway.
Boston Scientific
What it does: Boston Scientific is a global medical device manufacturer. Their products tackle a wide range of medical conditions from heart disease to urology.
By Harshil Patel : I reckon one of the best US stocks in the healthcare field is Boston Scientific (NYSE:BSX). This medical device manufacturer is going from strength to strength. It recently reported a strong first quarter with sales exceeding expectations.
Sales jumped by 15% versus the first quarter of 2023, driven by an innovative portfolio of products. It launched nearly 90 new products last year.
For companies to grow sales, innovation is one of the most important factors to consider. And Boston Scientific invests in research and development to create innovative new products and solutions.
One standout sector that I’d mention is Electrophysiology, which grew its sales by a whopping 72%. The jump was driven by encouraging adoption of its Farapulse platform.
Bear in mind that this industry is highly regulated. And Boston Scientific faces risks from both regulatory compliance and lawsuits.
That said, in the long term, an ageing population and other lifestyle factors are likely to support its growth.
Harshil Patel does not own shares in Boston Scientific.
DraftKings
What it does: DraftKings runs daily fantasy sports competitions and provides online sports betting services.
By Charlie Carman. DraftKings (NASDAQ:DKNG) is a relatively young company operating in a new market — online sports betting in the USA.
Since the Supreme Court lifted a federal ban in 2018, individual states have rushed to legalise the practice. DraftKings now has a presence in 27 of those markets.
With votes on sports betting due over the coming years in populous states like California, Florida, and Texas, there’s significant potential for further expansion.
Crucially, DraftKings is performing well across key growth metrics. Monthly unique players soared to 3.5m in Q4, representing a 37% year-on-year increase, and 2024’s revenue guidance has been lifted to a midpoint of $4.78bn.
Granted, DraftKings is still unprofitable, and competitive pressure from Flutter Entertainment and Entain poses risks for the firm’s market share.
Nonetheless, I think this market will be big enough to accommodate several major players and DraftKings looks well-positioned to benefit from further growth in the industry.
Charlie Carman owns shares in DraftKings.
Marvell Technology
What it does: Delaware-based chip manufacturer that designs and produces semiconductors and related technology.
By Mark David Hartley. Despite a $55bn market cap and $64 share price, Marvell (NASDAQ:MRVL) is a small player in the booming semiconductor market. Unlike AMD and Nvidia, it doesn’t publicly retail under its own brand but supplies components to other tech firms in the artificial intelligence (AI) field. I’ve been invested for a while with little to report but now it looks ready to take off. Earlier this month, Bank of America reiterated its buy rating on the stock with a price target of $95. Other analysts on average eye an $88 target.
Unfortunately, Marvell’s profits are very much tied to the success of the wider tech industry, so any falter there could hit it hard. AI is still a nascent industry running on a lot of speculation, so it falls in the ‘high risk/high reward’ area of investing. I like Marvell’s prospects but I’d balance it out with other stable stocks.
Mark David Hartley owns shares in Marvell Technology, Nvidia, and AMD.
Palo Alto
What it does: Palo Alto Networks markets itself as the world’s cybersecurity leader, via the provision of security tools.
By Jon Smith. When looking across the pond, I’m a big fan of Palo Alto Networks (NASDAQ:PANW). I bought the stock last month after the share price dipped following worse than expected results in February.
Even with the tumble following results, the stock is still up 61% over the past year. This speaks to the increase in demand for cybersecurity. I also bought this as a way to get exposure to artificial intelligence (AI). The rise in AI means that more complex cyber scams are occurring. Therefore, companies like Palo Alto that are developing products for this should benefit from higher demand.
A risk is the high benchmark of expectations that investors have. For example, the quarterly results in February were good (revenue jumped 19% year-on-year) but just not as good as the lofty expectations. Even with this, I think the scope for significant growth in coming years is there.
Jon Smith owns shares of Palo Alto.
