US stocks are popular among UK investors right now. On Trading 212, for example, the five most popular shares are all US-listed companies.
Here, I’m going to discuss two US growth stocks I’d be happy to buy for my own portfolio today. I believe both stocks have strong long-term growth potential.
A technology powerhouse
One I see as a great fit for my portfolio is Microsoft (NASDAQ: MSFT). It’s one of the largest companies in the US with a market-cap of around $1.8trn.
What I like about Microsoft is it’s dominant positions in a number of growth industries. Not only is it a leader in work-from-home technology (Office, Microsoft Teams) but it’s also a key player in the cloud computing industry with its Azure business. Additionally, as the owner of Xbox, it has a dominant position in the fast-growing video gaming industry. Overall, I think it’s very well-placed for growth in the years ahead.
Microsoft’s recent earnings, for the quarter ended 31 December 2020, were excellent. Revenue was up 17% to $43.1bn, while diluted earnings per share were up 34% to $2.03. Cloud revenues were up 23% to $14.6bn.
“Building their own digital capability is the new currency driving every organization’s resilience and growth. Microsoft is powering this shift with the world’s largest and most comprehensive cloud platform,” commented CEO Satya Nadella.
There are risks to the investment case, of course. In the cloud space, for example, MSFT faces a high level of competition from other tech players such as Amazon and Alphabet. The stock’s forward-looking P/E ratio of 33 also adds some valuation risk.
Overall, however, I see Microsoft as a great core holding for my portfolio.
A US digital healthcare stock
Another US stock I like the look of right now is Teladoc Health (NYSE: TDOC). It’s a leading provider of virtual healthcare services. Its platform provides convenient access to high-quality healthcare. Here, members can resolve healthcare needs through on-demand or scheduled visits with licensed doctors spanning multiple specialties.
Teladoc Health has been a major beneficiary of coronavirus pandemic-related distancing as the world embraced virtual healthcare. This is reflected in the company’s recent results. Revenue for the quarter ended 30 September 2020 was up 109% $288.8m while total visits increased 206% to 2.8m.
Looking ahead, I think there’s plenty of room for growth. Experts believe the global virtual healthcare market will roughly triple between now and 2026.
While I’m bullish on the long-term growth story here, there are certainly some risks to the investment case. At present, Teladoc isn’t profitable. For the third quarter of 2020, the company generated a net loss of $36m. The share prices of companies not yet profitable can be volatile at times. There’s also risk over its merger with Livongo last year. There’s no guarantee this will be a success.
Additionally, after a strong run over the last year, TDOC now sports a market-cap of $42bn. That puts the stock on a forward-looking price-to-sales ratio of about 21. This means there’s considerable valuation risk.
All things considered though, I see a lot of appeal in this US stock. I see it as a good long-term buy for my portfolio.
Edward Sheldon owns shares in Microsoft, Amazon, Alphabet, and Teladoc Health. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, Microsoft, and Teladoc Health and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.