My ISA is a great place where I can invest in a tax-efficient manner. Yet contrary to what some people think, I don’t just have to buy UK stocks for it. In fact, I can buy and hold large-cap S&P 500 stocks. This is great because it allows me to build a more diversified portfolio. Here are two US shares that I have on my watchlist right now.
A safe pair of hands
The first company on my list is Visa (NYSE:V). The global payment card services provider offers me something different as there isn’t any major UK stock that’s comparable. There are banks and financial service providers, but nothing comes close to Visa.
Over the past year, the stock is up 13%. Despite being a large and mature company, it’s still managing to post impressive growth numbers. For example, in the latest quarterly results from July, net revenue grew by 11% versus the same period last year. This helped to filter down to a 20% increase in the earnings per share.
The firm is continuing to increase payment capabilities through partnerships. Over the past year or so, this includes deepening relationships with the likes of Stripe, as well as more specific ones like CIBC in Canada and Moniepoint in Africa. Evidence of the success can be seen from the fact that total processed transactions for the quarter was 59.3bn, a 10% increase from the year prior.
In my view, there’s still plenty of opportunities out there for Visa to boost profitability going forward. However, there’s increased chatter about a potential US recession later this year. If seen, customers would likely reduce card spending to save money, which would be a negative for Visa.
A defensive tech share
A second stock I like is Salesforce (NYSE:CRM). The share price is also up 13% over the last year, but it’s some way off the highs from Q1 of this year.
The tech firm provides customer relationship software, often used by businesses for the sales or client services teams. I’ve used the software in the past and really liked it. Although it has some competition, it has a strong hold of the marketplace. There isn’t really a UK stock I can think of that is comparable.
The reason why I’m considering adding this to my portfolio is because it combines the appeal of a US tech stock alongside being a more defensive idea. On the one hand, it should stand to gain if the tech sector keeps roaring on like it has in recent years. Yet if we do get a slowdown in the US, Salesforce should be able to withstand this better than others. This is because businesses rely heavily on the software used. Given the nature of the contracts, it’s not like companies can (or would want) to cut things off swiftly.
One risk is that the stock does have a high price-to-earnings ratio. It currently stands at 35.03, which is well above what I would call a fair value. This could indicate that the stock is overvalued.
Both ideas are on my watchlist to purchase when I have more free cash.
This post was originally published on Motley Fool
