We recently compiled a list of the 10 Best American Stocks To Buy For Foreign Investors. In this article, we are going to take a look at where Uber Technologies, Inc. (NYSE:UBER) stands against the other American stocks.
With August Ending, What Can We Expect From US Markets?
Historically, September is considered to be the worst month for stocks. The S&P 500 index has generally averaged a decline in the month of September for decades, which has resulted in many financial news reporters, such as the Wall Street Journal, dubbing September as a weak month for US stocks. So with August coming to an end, many investors in the US and abroad may be wondering whether now is a good time to pick up US stocks for their portfolios.
While history can often be an accurate indicator of stock performance, this is not always the case. This year may very well be an outlier in the historical trend outlined above, seeing as many financial analysts are expecting the US Federal Reserve to move ahead with a rate cut this September. CNBC’s “Power Lunch” on August 21 highlighted that according to the Fed’s recent meeting minutes, it is quite probable that we will be seeing a rate cut this September, which will probably result in stock prices rising and the markets performing better. This is because when a rate cut is announced, consumers and businesses tend to increase their spending and investment, which has a direct and positive impact on stock prices, causing them to rise. As such, if we do see a rate cut next month, investors may actually benefit from investing in American stocks.
How Would a Potential Rate Cut Impact The Markets?
On August 22, Tom Lee, Fundstrat Global Advisors Managing Partner, joined CNBC’s “Squawk Box” to discuss the status of the US markets at present. Here’s what he had to say:
“The FMOC minutes that came out yesterday showed the Fed staff saying this is a strong labor market, while that jobs report that came out Friday and the revisions that just came out show a lot of jobs disappearing. It’s not a stronger market, and I think it gives more ammunition for the Fed to start a cutting cycle, and that’s gonna give a lot of life to the economy and to the markets. Especially cyclical stocks and small-cap stocks.”
According to Lee, investors looking to buy into US equities right now would benefit greatly from a rate cut if it does come about in September. A major beneficiary of such a cut would actually be the tech sector. In this regard, Lee said the following:
“I think tech is still in a good place because of AI, and NVIDIA should reinforce that. It’s not a demanding multiple, maybe 28x forward earnings, which is, for the best, one of the most important companies in the world, not a high multiple. So, if tech is in a good place, and then we get fed cuts, I think it allows the whole overall market to expand.”
Considering the above, US markets may actually be a good place to invest for foreign investors at present, and within these markets, tech may be a good place to start. This is why we’ve compiled a list of the best American stocks to buy for foreign investors, comprising most tech companies. Our list includes some of the best American tech stocks to buy, alongside some of the top US stocks for foreigners.
Our Methodology
We selected the most popular American stocks among major hedge funds to compile our list, by using Insider Monkey’s hedge fund data for the second quarter of 2024. These companies are considered to be the best US stocks to invest in today according to major institutional investors, and should thus be considered by foreign investors looking to buy into American equities.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A close up view of a hand holding a smartphone, using a ride sharing app.
Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 145
Uber Technologies, Inc. (NYSE:UBER) is a San Francisco-based company well known for its ride-hailing app. We believe it is one of the best American stocks for foreign investors to buy right now because of its stellar consistent growth and ability to continue this growth even in a difficult economy.
According to the company’s CEO, Dara Khosrowshahi, in Uber Technologies, Inc.’s (NYSE:UBER) second-quarter earnings call, the main challenges that may arise for the company are the strength of its consumer and the possibility of a recession impacting its growth. To alleviate these concerns, Khosrowshahi noted that, first off, the Uber consumer seems to be in great shape, with the company’s audience being larger than ever, resulting in its services continuing to be used consistently on a large scale. Since ride-hailing apps offer expensive transport relative to public transport, the Uber consumer generally tends to have a higher income, and according to Uber Technologies, Inc.’s (NYSE:UBER) current analysis, there doesn’t seem to be any trading down across its consumers’ income cohort.
With consumer strength out of the way, the bigger issue of performance in a time of economic difficulty comes up. However, Uber Technologies, Inc. (NYSE:UBER) has developed a mechanism to ensure its consistent growth because it is uniquely positioned to offer immense value for autonomous vehicle (AV) players looking to publicize their tech at scale. Many AV players are currently facing the issue of their vehicles being too costly for the average consumer. In this regard, passenger ground transportation providers such as Uber Technologies, Inc. (NYSE:UBER) can act as a valuable partner for AV players, and the company is presently in talks with many AV companies to encourage them to join its platform for mutual benefit.
Uber Technologies, Inc. (NYSE:UBER) had 145 hedge funds long its stock in the second quarter, with a total stake value of $8.7 billion.
Overall UBER ranks 8th on our list of the best American stocks to buy for foreign investors. While we acknowledge the potential of UBER as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UBER but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.