While its market is mainly in China, the company is expanding overseas in the Philippines, Indonesia and Vietnam. Morningstar analyst Chelsey Tam has a $207 fair value price on the stock. Why do we invest this way? He has a $20 price target on HIMX, implying expected upside of more than 66%. HIMX is a fabless chipmaker meaning it designs the chips and contracts out manufacturing and its integrated circuits are used in displays for TVs, laptops, smartphones and other consumer and automotive electronics. Canaccord Genuity also has a Buy rating on STM following the upbeat earnings report with a price target of $51. The easiest (and perhaps safest) way for you to invest in foreign stocks is by investing in exchange-traded funds (ETFs) or mutual funds that include non-domestic companies. Beyond computers and mobile devices, semiconductors are now essential components for automobiles, appliances, and a wide range of other everyday products and services. The index that tracks the performance of 500 of the largest companies listed on U.S. stock exchanges is now up 18% year-to-date and trading in record-high territory. Himax Technologies (HIMX, $12.04) is the second semiconductor name featured on this list of international stocks. Many investors prefer to pay more for domestic stocks because business growth in international markets is considered less reliable than growth in the U.S. Another big factor is that most investors simply arent as familiar with opportunities in international markets because they have limited personal experience with foreign companies -- and because these businesses tend to receive less coverage from U.S. analysts and media outlets. While foreign companies sometimes come with added risks, international companies tend to be cheaply valued relative to comparable businesses in the U.S. FinVolution Group (FINV, $5.78) is a Shanghai-based online lender that offers primarily short-term consumer loans to individuals unserved or underserved by traditional financial institutions. Pharmaceutical investors, however, have long known this English company is tops among international stocks thanks to its most popular drugs, including high cholesterol-fighter Crestor and Nexium, which treats acid reflux. Market-beating stocks from our award-winning analyst team. All rights reserved. In contrast, the MSCI All Country World Index, excluding the U.S., is up 5.3% over the same period. Meanwhile, "a multitude of pipeline catalysts and new launches should aid ongoing momentum," the analysts say. The president faced pressure from truck drivers who protested higher diesel prices at the pump. Fifth, consider Brookfield Asset Management (BAM) and Brookfield Infrastructure Partners (BIP) as well-managed ways to get curated global and emerging market exposure. Its sprawling empire also includes maps, cloud storage, an augmented reality network, advertising platform, autonomous vehicles, translation service, artificial intelligence (AI), news, social networking, and games, among others. She writes in a report that Baidu is "undervalued," after having sold off amid regulatory uncertainty in China. Moreover, its recently completed $39 billion acquisition of Alexion could "diversify cash flows into the rare disease market, which should help Astra consistently reinvest in research and development, supporting the firm's wide moat," he adds. The report says many of STM's key financial metrics in the second quarter beat expectations: sales, gross margin, earnings before interest and taxes (EBIT) and earnings per share. Political instability is a risk to weigh when investing internationally. One reason for this discount is the changing regulatory environment in China for online lending. The largest oil and gas company in Latin America, Petrobras is both an upstream (extraction of raw materials) and downstream (supplying users with petroleum products) energy firm. As the worlds largest economy, the U.S. economy is likely to grow more slowly than countries with smaller, less-developed economies. FinVolution had 130.8 million registered users on its platform at the end of June. Alternatively, the iShares PHLX Semiconductor ETF (NASDAQ:SOXX) mostly consists of U.S. companies, but Taiwan Semiconductor Manufacturing (NYSE:TSM) stock is one of its biggest components. It is second only to Alphabet's (GOOGL) Google in terms of the largest search engine in the world, and commands more than 70% of the search engine market in China. Political instability and other developments in the country can devalue an investment, and the values of currencies fluctuate. 10 Stocks to Watch, 10 High-Quality Stocks With Dividend Yields of 4% or More, 11 Mighty Mid-Cap Stocks for the Rest of 2021, 32 Bankruptcy Filings Chalked Up to COVID-19. It is sometimes referred to as the Google of Russia and was included as a top international stock to watch in an earlier version of this article, but Russias invasion of Ukraine disrupted the companys outlook. AstraZeneca also recently reported second-quarter sales that beat Wall Street expectations. However, gross margins weakened likely due to producing a larger supply of its no-profit COVID-19 vaccine, the analysts say. If you invest in the Vanguard Developed Stock Index (VEA), youll be 22% in Japan. Other risks include potentially higher marketing costs to acquire new users and macro-environment uncertainties that could raise the delinquency ratio. The valuations are cheap here, but the upside is enormous. Particularly in emerging markets, you may have relatively poor visibility into a company's business operations and other factors that affect valuations. These trends suggest that the worlds most dramatic economic growth over the next century will occur outside the United States. Some foreign companies list their stocks on U.S. exchanges in addition to their home markets, in which case you can simply purchase shares on the Nasdaq or the New York Stock Exchange (NYSE) through domestic brokerages, just as you would for a U.S.-based company. Headquartered in the Netherlands, ASML Holding (NASDAQ:ASML) is one of the worlds leading providers of semiconductor manufacturing equipment. Returns as of 08/02/2022. The United Nations predicts Africa will account for more than half of global population growth through 2050, and Shoprite Holdings (OTC:SRGH.Y) status as the continents largest grocery chain positions it to benefit from economic and demographic tailwinds. Ad revenue comes mainly from its search engine, whose algorithms use hyperlinks to measure the quality of websites it indexes. If you stick to the popular MSCI EAFE index and all the funds that track it, itll be more like 25% in Japan. Beijing-based Baidu primarily derives its revenue from advertising and content subscriptions. India's largest private sector lender, HDFC Bank (NYSE:HDB), is in a favorable position to benefit as the countrys economy continues to develop. For an example of these dynamics at play, consider the case of Yandex (NASDAQ:YNDX). As a result, there's a big push for localized chip production in the U.S., Europe, and other major markets. By establishing a clear strategy for your non-domestic portfolio, you are better positioned to endure market turbulence and pursue long-term gains. The delta variant of COVID-19 also is a factor, which prompted her to cut her 2021 revenue estimate by 5%. You may also have the opportunity to buy ADR stakes in companies that dont trade on U.S. exchanges through over-the-counter (OTC) markets accessible through your broker. The latest economic data showed slowdowns in both factory activity and construction spending. Discounted offers are only available to new members. In July, the S&P 500 Index booked its sixth straight month of gains. But with the vast majority of global population growth in coming decades projected to occur outside of the U.S., the associated demographic factors and the industrialization of relatively underdeveloped areas suggest that this centurys biggest economic growth will also happen outside the country. Still, Tam calls Baidu a "leader" in AI in China since an AI-powered algorithm powers its search engine. When people have a little extra cash, they indulge in offerings from these companies. Whether youre looking to strengthen your portfolio through diversification or create new avenues to explosive growth, international stocks can be an excellent component of your investment portfolio. The company has traditionally performed well during difficult economic times, and, in our view, has strong long-term growth opportunities.". We break it down. While emerging markets grow faster, they also tend to be more volatile, so you may prefer to focus on developed economies. The other main way to invest in foreign stocks is by using a brokerage to obtain direct access to the exchange where the company is listed. Moreover, Himax "sees no slowdown in automotive demand momentum," he says. So far, current CEO Joaquim Silva e Luna has pledged to continue executing the existing business plan and delivered the strong earnings report that sent the energy stock soaring earlier this month. Access to chip supplies is also a major national security issue for countries around the world. Kiplinger is part of Future plc, an international media group and leading digital publisher. 10 Easily Fixable, But Often Overlooked, Financial Planning Items. With the caveat that Chinese stocks have been volatile lately amid a rash ofgovernmental regulation, we included two high-growth, high-quality stocks from China that nonetheless look attractive over the long run. This dominance provides a beneficial cascading effect. But be aware that ADRs may not offer privileges such as voting rights conferred by owning a companys home-market shares, so you may need to be willing to forgo the prospect of voting as a shareholder to acquire stakes in promising international companies. Even foreign companies approved by the U.S. Securities and Exchange Commission (SEC) to list ADRs on U.S. exchanges will sometimes fail to meet reporting expectations, so its essential to understand how well and by what means an international company communicates with its investors. The company also reported 1.2 million new borrowers in the second quarter, a 500.5% increase from the year prior. Despite the fact that Yandex had been posting very impressive sales growth and may otherwise have been on track for more wins, geopolitical conditions created massive headaches for investors. Baidu's other core revenue driver comes from iQIYI (IQ), which is a service similar to Netflix (NFLX). ASML is set to play a big role in expanding global manufacturing capacity. Credit Suisse and Scotiabank upgraded the stock to Outperform (Buy) after the earnings report. STM is one of the largest chip manufacturers in Europe whose clients include Apple (AAPL), Tesla (TSLA), HP (HPQ), Samsung and Huawei. Recently, Petrobras reported record second-quarter earnings that beat Street expectations, reversing the year-ago loss due to a rebound in oil prices and strong demand for electricity and natural gas. Division performance also bested expectations across the board. Net debt decreased by 25% to $53.3 billion year-over-year. Rising demand for iron ore and copper from recovering economies worldwide is helping buoy the business of Rio Tinto (RIO, $72.52), one of the world's largest mining and metals companies. Founded in 2000 by Robin Li, a former employee of a Dow Jones & Co., and Eric Xu, Baidu was the first Chinese company to be included in the Nasdaq-100 Index of the largest non-financial companies. MercadoLibre (NASDAQ:MELI) is a leading provider of e-commerce and fintech services in Latin America. Making the world smarter, happier, and richer. Many investors should strongly consider allocating a percentage of their portfolio to stocks in international markets. In addition to political instability, international markets often see outsized impacts when economic conditions worsen. Emerging markets represent the bulk of forward growth but only a small fraction of current market capitalization, and are therefore under-weighted in most global index funds. Among international stocks, this one is poised for strong returns, at least according to Gerra. Buying shares of a fund such as the Vanguard FTSE Europe ETF (NYSEMKT:VGK) gives you a position in more than 1,300 companies on the continent, while the iShares MSCI Emerging Markets ETF (NYSEMKT:EEM) confers exposure to more than 1,200 large and mid-size companies from countries such as China, India, Brazil, South Korea, and South Africa. Analyst Alex Le notes that the company reported "relatively resilient" earnings despite uncertainties from COVID-19 in 2020. The company has "built up a network effect and a positive feedback loop" stemming from its search business, the analyst says. Third, be aware that the cheapest markets tend to outperform over time. Stock Advisor list price is $199 per year. Before investing in international stocks, consider how much risk youre comfortable with taking. Even countries such as Poland, which is home to roughly 38 million people and has actually seen its population shrink in recent years, could expand its gross domestic product (GDP) at rates that significantly exceed the growth rate of the U.S. GDP. The company has more than 6,300 branches across more than 3,100 cities and towns. BIDU spun off IQ in 2018, but retains majority ownership. These include cancer drugs Tagrisso and Imfinzi, as well as treatments for respiratory diseases and diabetes. FinVolution also is shifting to serve customers with better credit quality and lower pricing. BofA Global Research reiterated its Buy rating on STM with a price target of $49, according to a recent note. Foreign markets present opportunities that you miss if your holdings are strictly limited to U.S.-based stocks. When it comes to international stocks, Argus Research analyst David Coleman is targeting major upside for this one, per his $108 price target. Investing in foreign stocks is a way to have a direct stake in growth outside the U.S. and to benefit from a broader range of market trends and opportunities. By now, the world knows the name AstraZeneca (AZN, $59.39) for its development of a COVID-19 vaccine. "It also continues to return cash to shareholders through dividend increases. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Baird analyst Tristan Gerra describes Himax as a "differentiated" technology company that not only focuses on secular displays but also on emerging consumer technologies such as 3D sensing. Revenue also beat analysts' forecasts, more than doubling from a year ago, to $18 billion. Nevertheless, the price target represents an implied upside of 59.2% from FINV's current level. The chipmaker reported second-quarter earnings that beat Wall Street's consensus expectations and also raised its forecast for full-year sales. "Rio Tinto has strengthened its operating performance and balance sheet by cutting costs and selling non-core assets," he says. The average recommendation of the 35 analysts that follow the stock that are tracked by S&P Global Market Intelligence is Outperform (Buy). The investment bank has had the rating since February, maintaining it even after the stock plunged due to a CEO change. However, a recurring risk is political interference. Positive earnings reactions for Amazon.com (AMZN) and Apple (AAPL) lifted the broader market today. Petroleo Brasileiro(PBR, $10.10), or Petrobras, is the state-controlled oil company in Brazil and ranks no. In a recent note, UBS says the stock drop was an "overreaction.". Users receive better, more tailored recommendations, making it less likely for users to use another search engine.". Here are seven international stocks that could be solid buy-and-hold investments. This is still a 60% discount to the internet sector average, according to a recent research note. The company also recently launched a three-year share buyback program of up to $1.04 billion. If you invest all your foreign holdings into something like the Vanguard International Stock Index (VEU), youll be 18% in Japan. U.S. markets are looking mighty expensive these days, but there are still plenty of investing opportunities available out there especially in international stocks. We screened companies according to estimated earnings per share (EPS) growth over the next two years, low forward price-to-earning (P/E) ratios indicating the shares may be undervalued analyst ratings, and whether they are traded on a major U.S. stock exchange. Longer term, Baidu enjoys a wide competitive moat due to its dominant market share in search, which is "difficult" for competitors to replicate, Tam says. Le is bullish on the company's growth prospects as competition eases from major online platforms while industry consolidation continues due to tighter regulations. PBR also announced a $6 billion dividend payout for 2021. Our preview of the upcoming week's earnings reports includes Advanced Micro Devices (AMD), Block (SQ) and DraftKings (DKNG). As far as international stocks go, this one is well-liked by analysts. 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RIO's operations are located in mostly safer havens of Australia, North America and Europe, although it has a presence in six continents, he adds. A global account with a participating U.S. brokerage is suitable, or you can establish a brokerage account in the country where you intend to trade. In addition to the lofty price target, Coleman rates RIO a Buy. "Astra's strong lineup of next-generation drugs should significantly offset sales lost to new generic competition," Conover says. Poland is benefiting from industrialization initiatives and a fast-growing tech sector that are boosting most Polish companies. 181 among the world's largest companies in the Fortune Global 500. These shares will usually be in the form of American depositary receipts (ADRs) and represent equity stakes equivalent to a predesignated number of shares of the companys core stock on its home exchange. Demand for interactive entertainment is still poised for huge growth over the long term, and CD Projekt has compelling opportunities as it releases content expansions for existing titles, launches new properties, and taps into emerging trends, including augmented reality and the metaverse. Moreover, another positive is the company has a "large" portfolio of long-lived assets with low operating costs, the analyst writes in a report. MercadoLibre has continued to increase sales at a rapid clip despite macroeconomic headwinds, and the businesss forefront positions in online retail and fintech point to huge expansion potential as these services become more popular in Latin America. AstraZeneca nevertheless is developing "one of the strongest" pipelines among pharmaceutical companies with several drugs holding "blockbuster potential," writes Morningstar analyst Damien Conover in a research note. Although the rewards of investing in international stocks can be high, there are some risks to consider. In early August, the Taiwanese company reported second-quarter revenue of $365.3 million, nearly double its results from the year prior. It could ma, Record high inflation is driving up the price of everything from gas to groceries, but the impact of inflation in the U.S. on federal tax brackets and, Stock Market Today (8/1/22): Energy Sector Drags on Stocks, Advanced Micro Devices Q2 Earnings Expected to Soar, Stock Market Today (7/29/22): Big Tech Boosts Stocks to Best Month Since 2020, Subscribe to Kiplinger's Personal Finance, The 21 Best Stocks to Buy for the Rest of 2021, Warren Buffett Stocks Ranked: The Berkshire Hathaway Portfolio, The Pros' Picks: 5 Stocks to Sell or Avoid, Can AI Beat the Market? The London-based corporation reported its highest ever earnings in the first half of 2021, and also announced a $9.1 billion dividend payout. Gerra has an Outperform rating on the stock, which is the equivalent of a Buy, and believes the company should continue to benefit from an environment of strong unit growth for its products in 2022, while product mix and pricing are expected to buoy margins past this year. Based in Poland, CD Projekt (OTC:OTGL.Y) has established itself as a strong player in the video game industry. For instance, many countries in Latin America have seen levels of inflation even higher than the U.S. and relatively weak economic recoveries on the heels of the coronavirus pandemic. "The larger the user base, the more user data Baidu can collect and analyze, improving the search engine algorithm and relevancy of search results. Longer term, he sees Himax positioned well as a key player in the augmented reality market. Fourth, realize that you can use single-country ETFs to broaden your international exposure, or concentrate more heavily into countries youre bullish on. Visit our corporate site www.futureplc.com Future US LLC, 10th floor, 1100 13th Street NW, Washington, DC 20005. Its easy to let important financial tasks slip your mind, so take a minute to check this list for any to-do items you may have forgotten. When looking at the best international stocks, it's hard to not mention STMicroelectronics (STM, $42.33). UBS upgraded the stock to a Buy rating from Neutral, with a price target of $11, revised from $2.10, according to a recent report. The company was founded in Argentina and is still growing quickly there, but it actually does most of its business in Brazil and also generates a major portion of its revenue in Mexico. The company is best known for properties including The Witcher and Cyberpunk 2077, but it also operates an online marketplace and sharing platform for digitally distributing games. Baidu (BIDU, $137.65) is the other name out of China featured on this international stocks list. For example, an ADR share of the Chinese video streaming company iQiyi (NASDAQ:IQ) trading on the Nasdaq is roughly equivalent to seven ordinary shares on the Chinese exchange. Invest better with The Motley Fool. The fund also includes foreign chipmakers ASML Holding and NXP Semiconductors (NASDAQ:NXPI), among others. Of course, domestic companies are working to expand their presence in international markets and should profit from global growth. Himax is a "leading supplier" of 3D sensing components, he writes in a recent note. "The non-driver business should see a significant inflection point ahead, driven by new products and design wins, which are incremental to the core business' current strong fundamentals," Gerra adds. "We have found Wall Street's bullishness on stocks to be a reliable contrarian indicator," says Savita Subramanian, equity and quant strategist at BofA Securities. UBS has a Buy rating on Petrobras after the stronger-than-expected second-quarter results. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. This user data trove also gives Baidu a leg up when it comes to serving personalized ads, which leads to higher ad revenue as well. Jefferies analysts say the Alexion acquisition implies the deal is accretive to earnings by 30 cents per share to 40 cents per share, which should "calm some nerves," according to a recent note. During a recession, dividends are especially important because they give you a cushion even if the stock price falls. Foreign companies are also more likely to fail to meet the communications and reliability expectations of most U.S. investors. Expanding international economies, increasing productivity, and improving standards of living are leading to the rise of a new global middle class. Opening a global account or foreign brokerage account may cause you to incur fees and taxes and face additional regulations much more than youd expect from a U.S. equity market. Stocks come in all different sizes and varieties. Patents for both of these drugs have expired, with another popular drug Symbicort (asthma) heading that way. Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002.

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