Over the course of 2021, the US stock market has outperformed its UK equivalent. The NASDAQ, S&P 500 and the Dow Jones have all posted record highs. Here in the UK, the FTSE 100 and FTSE 250 are still some way from matching these levels. With that in mind, if I had £1,000 ready to deploy at the moment, here are some of the top US stocks I’d consider buying.
A popular US stock, but for good reason
The first is Amazon (NASDAQ:AMZN). Before people roll their eyes at such a generic choice, hear me out. I get that Amazon is one of the most popular stocks globally for investors. Yet there are good reasons for this. The share price might only be up 7% in the past year, but it’s provided a 4.5x return over five years.
The business is also still showing growth. In its Q3 filing, net sales were up 15% versus the same period last year. Even though operating income was lower, it still made $4.9bn for the quarter, quite a staggering amount.
With the scope of diversification in business operations and recent acquisitions, I think Amazon is well-placed for the future. Clearly, one risk is that Amazon grows to such a size with so many fingers in pies that it becomes less focused and efficient.
With a lot of focus on the top US stocks posting share price gains, I could easily forget about some great income picks. For example, Exxon Mobil (NYSE:XOM). It has a dividend yield of 5.8%, with a share price gain of 46% over one year.
The oil and gas company is one of the largest in the sector and has a rich history over decades since the merger of Exxon and Mobil in 1999. This gives me confidence the business will continue to function in years to come, even during tough times.
One risk is the projection for oil prices for 2022. If we do see tighter restrictions on travel, then fuel demand will fall. If supply stays the same, this will lower the oil price and negatively impact Exxon Mobil.
Another top US stock that pays dividends is Western Union. The dividend yield for one of the world’s largest international payment businesses is 5.3%. The share price is down 17% over the past year, which is one reason why the yield has moved higher.
The share price has fallen due to decreasing offline money transfers due to the pandemic. If restrictions on travel continue, this could be a risk with investing. However, the company is able to offset some of this via growth in digital payments instead. Further, as travel picks up again, the business should naturally see a rebound.
Allocating the cash
These three top US stocks are viable options for me to consider as a UK investor. With my £1,000, I’d split it equally between the them. However, I could also invest more in a particular stock if I had a high conviction. I think Western Union is the most undervalued stock of the trio, so could put more than 33% of my money in the stock.
Overall, they’re my top pics as we head into 2022.
Jon Smith has no position in any share mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended 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.