Every month, we ask our freelance writers to share their top US stocks with investors — here’s what they rate highly for June!
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Adobe
What it does: Adobe is a global developer of various computer software programs for photo, text and video editing.
By Mark David Hartley. Adobe (NASDAQ:ADBE) is a lesser-known US artificial intelligence (AI) stock with a much lower entry price than leading AI stocks Nvidia and Microsoft. Yet the company has been breaking boundaries with its new generative AI tool Firefly. The tool can be used with Photoshop and other Adobe software, creating instant photo-realistic backgrounds and fills.
Yet despite its potential, the share price is down 16% this year. This follows weaker-than-expected sales reported in its March quarterly earnings announcement. Investors are allegedly disappointed with the slow adoption of Adobe’s AI integrations, which generative AI platforms like Stable Diffusion and Midjourney have overshadowed.
However, with the generative AI market expected to increase at a compound annual growth rate (CAGR) of 42% over the next decade, I believe Adobe will have its day. Unlike other fly-by-night options, I believe its slow and more purposeful development strategy will pay off in the long run.
Mark David Hartley owns shares in Nividia and Microsoft.
Amazon
What it does: Amazon is a technology company that operates in the e-commerce, cloud computing, and digital advertising markets.
By Edward Sheldon, CFA. Amazon (NASDAQ: AMZN) stock has had a good run recently. But I think it can climb higher.
Right now, Amazon’s profits are soaring. This year, Wall Street analysts expect earnings per share to come in at $4.54 – an increase of nearly 60% year on year.
At the same time, the company’s valuation is at historical lows. If we take that 2024 earnings forecast figure, the price-to-earnings (P/E) ratio today is only about 40. That’s miles below where its earnings multiple was a few years ago. It’s worth pointing out that the price-to-earnings-to-growth (PEG) ratio is currently under one, which suggests that the Big Tech stock is cheap.
Now, one risk here is economic weakness. This could impact growth in the company’s online shopping, cloud, and digital advertising businesses.
Overall though, I’m very bullish on this ‘Magnificent Seven’ stock. I expect it to continue climbing in the years ahead as the world becomes more digital.
Edward Sheldon owns shares in Amazon.
DraftKings
What it does: What started as a fantasy sports platform, DraftKings is now one the US’ largest sports betting companies.
By Charlie Keough. I’ve had DraftKings (NASDAQ:DKNG) on my radar for a while. With its shares trading 9.2% lower than the 52-week high they reached in March; I reckon this month could be the time to make my move.
Although unprofitable, the company is moving in the right direction. For Q1, revenue grew 53% to nearly $1.2bn. Monthly unique payers increased 23% to nearly 3.5m.
More widely, over the last two years, its per-customer acquisition costs have fallen by more than 40%. As a result, this has provided a major boost to the firm’s margins.
One of the biggest threats is competition. As more players enter the lucrative space, this could see the business’ market share come under pressure.
But even so, I still like the look of DraftKings shares. The current global online sports betting market is worth $54.6bn and is expected to grow at a compound annual growth rate of around 10.5% through to 2032. By that point, it could be worth up to $142.6bn. That’s plenty of demand for the business to capitalise on.
Charlie Keough does not own shares in DraftKings.
Intuitive Surgical
What it does: Intuitive Surgical is the world leader in robotic surgery. Its da Vinci system is revolutionary.
By Oliver Rodzianko. I believe that the next big stock market craze is going to be robotics. While AI has already begun to transform information transfer in the mainstream, it will likely revolutionise mainstream physical jobs next.
Intuitive Surgical (NASDAQ:ISRG) already has a headstart with its most famous product, the da Vinci system. Using four robotic arms and a clever remote operating device, hospitals can offer minimally invasive surgery with high precision.
If the company can adapt and include AI more prominently next, it might be the first organisation to one day offer fully autonomous operations. That’s why I’m betting big on the company now.
However, there’s some speculation here because the company has not started planning for this yet. If another startup beats them to the market with autonomous surgery or a better robotics system, Intuitive Surgical could lose its market lead.
Nonetheless, I find it promising. It’s likely my next investment!
Oliver Rodzianko does not own shares in Intuitive Surgical.
MercadoLibre
What it does: MercadoLibre is Latin America’s largest ecommerce and fintech platform, operating across 18 countries.
By Ben McPoland. MercadoLibre (NASDAQ: MELI) just keeps getting stronger and I think the shares are worth considering for long-term investors.
The company is growing multiple businesses at once — e-commerce, logistics, digital payments, advertising, while its Amazon Prime-esque loyalty programme (Meli+) is fuelling even more spending across its marketplace.
First-quarter revenue of $4.3bn demolished analysts’ expectations for $3.8bn. This beating of estimates is nothing new. What is new, however, is the earnings growth. Its quarterly net profit surged 71% year on year to $344m, while Wall Street expects around $1.7bn in profits this year (50% growth).
Management said: “We believe that we are uniquely placed to capitalise on the structural shifts that are transforming the region’s commerce and financial services markets”.
Mercado Pago, its juggernaut fintech arm, has just applied for a banking license in Mexico in a bid to become the country’s largest digital bank.
One risk here is this is an expensive stock, trading at 51 times forecast earnings. But today’s share price might end up looking cheap in a few years time if the firm keeps growing its profits rapidly.
Ben McPoland owns shares in MercadoLibre.
