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All Contents © 2019The Kiplinger Washington Editors
By James Brumley
| March 12, 2018
It’s not that the recent volatility of the U.S. stock market hasn’t created a ripple effect that worked against — and then for — companies based in other countries, it’s that our wild swings haven’t necessarily been mirrored overseas. In other words, you may have seen a different impact on your portfolio with a few more stocks that aren’t domiciled in the United States.
Some overseas names shrugged off the early-February meltdown, while other global stocks took an even bigger hit, making them big-time bargains now.
To that end (and to shield yourself from future unknowns unique to the U.S. marketplace), here’s a look at nine global stocks you might want to add to your portfolio sooner than later. Doing so adds another level of diversity to your aggregate holdings.
Bonus: A little more exposure to foreign stocks means you’re less subject to any volatility stemming from the United States’ highly charged political environment in place right now.
Prices and data are from the original InvestorPlace story published on Feb. 20. Click on ticker-symbol links in each slide for current prices and more.
Sensata Technologies (ST) is anything but a household name. But if the Netherlands-based outfit were to close shop, plenty of consumers and corporations would eventually notice its absence. Sensata Technologies makes a variety of sensors, including temperature sensors, pressure sensors, airflow sensors and more.
As the Internet of Things era picks up speed at the same time the global economy heats up, Sensata’s well positioned to capitalize on its expertise.
Indeed, we’re already seeing the benefits of this undertow. Last quarter’s organic revenue was up more than 5%, with similar growth rates projected for this year and next. It’s not a red-hot pace, but for an industrial name in a rock-solid line of business, it’s compelling all the same.
It’s been called the Twitter of China, though that’s not a complete definition. Weibo (WB) a blend of Twitter and Facebook, allowing its users to share more about their lives and better organize their social media interactions than Twitter can alone.
Regardless of what its most meaningful comparison is, the company’s results speaks for themselves. Last quarter’s revenue was year-over-year, extending a long-standing growth streak that’s been just as impressive.
Look for more of the same this year too, spurring an even more impressive improvement in earnings. The 52% increase in sales in store for 2018 should be enough to drive per-share profits from $1.80 last year to $2.76 per share this year.
Prepare for an evolution in consumer technology. If it’s got a screen, it’s about to get a much better screen... and that’s saying something, considering how vivid and vibrant the most recent generation of 4K display screens have been.
That evolution, of course, is the mainstreaming of OLED (organic light-emitting diode) screens. Universal Display Corporation (OLED) is a crowd-favorite way to make a play on the OLED movement, but Korea’s LG Display (LPL) has the history, name and the existing partnerships that make it the better bet.
Those who know the LG Display story will know that doesn’t sound quite right. Last quarter’s sales were down 10%, cutting earnings to nearly nothing. Those who know the OLED story very, very well, however, know that we’re at a turning point in the technology’s life, with prices coming down and demand soaring. Now’s the time to get in, while the stock’s trading at less than nine times this year’s expected earnings.
Do you think the world’s telecommunication systems are ready to handle the advent of cloud computing and the rise of the Internet of Things? They’re not. But, that’s good news for Canada’s Mitel Networks (MITL).
And make no mistake... that revolution is around the corner. In a survey it took late last year, Mitel explained that machine-to-people interactions are expected to improve customer experiences, with most of the survey’s participants expecting machine/people interactions within a couple of years.
In the meantime, Mitel announced earlier this month that its cloud customers in Europe alone are now servicing a total of one million users.
Mitel Networks is the shape of things to come, even if you never actually think about what it does to make your life better.
The idea of offering easy-to-use website-building solutions isn’t anything new; lots of companies have tried it, with mixed success. Israeli outfit Wix.com (WIX) has arguably proven it can be a viable business model.
Actually, it’s not viable yet. As Lawrence Meyers detailed last week, Wix lost money — again — last year, turning $426 million worth of revenue into a loss of $50 million.
That could change in a big way this year, however. For 2018, the company foresees revenue growth of 40%. Better yet, that should be enough to put Wix.com in the black.
Analysts are looking for a profit of 59 cents per share this year (versus a loss of one cent per share in 2017), leading to earnings of $1.27 per share in 2019. The company just needed a little more scale to get over its hump.
Contrary to popular belief, Busch beer — along with Budweiser and Michelob brands — aren’t American products anymore. They’re still made in America for Americans, to be clear. But since thanks to a series of acquisitions over the course of the past several years, they’re all part of a Brazilian-Belgian conglomeration of several booze brands under the Anheuser Busch Inbev (BUD) umbrella.
Beer aficionados will know that the beer business is changing. The rise of craft beers and microbreweries has chipped away at the dominance of the well-established names.
Anheuser Busch Inbev isn’t not responding though. After several similar moves, the buzz is that it’s mulling a purchase of Craft Brew Alliance (BREW) as a means of maintaining its relevancy and marketability.
Whatever’s on its pick list, it should be enough to inflate 2017’s projected bottom line of $4.07 per share to $5.10 per share this year.
The Fibria Celulose (FBR) you know and love today may not be the same one you know and love in the near future. Whispers are circulating that the Brazilian pulpmaker is in talks with Paper Excellence to join forces and create a massive paper pulp outfit. If it happens, the combined companies would enjoy even more pricing power.
And if it’s not Paper Excellence, Fibria may be close to teaming up with papermill Suzano.
That deal would materialize at a time when paper pulp prices are on the rise anyway, augmenting a tailwind driven by higher pulp prices. Fibria Celulose swung back to a profit last quarter thanks to a stronger pulp market (and with a little help from the currency market), tripling its EBITDA on a year-over-year basis.
When investors think of major technology companies, they tend to think of U.S. outfits like Apple (AAPL) or China’s Alibaba Group (BABA). British companies generally don’t factor in.
But maybe they should, in light of U.K.-based Atlassian (TEAM).
In simplest terms, Atlassian offers collaboration and project management platform that’s not only easy to use, but easy to adopt. Baird analyst Rob Oliver explains “what Atlassian is doing is trying to address how a world might look post-Microsoft Office. Their revolutionary product addresses this big problem – how to collaborate effectively in teams. It’s no accident their stock ticker is TEAM.”
Customers love it too, if last quarter’s revenue growth of 43% is any indication of how well it’s clicking with customers. Earnings were up 44%.
Last but not least, add Argentina’s Mercadolibre (MELI) to your list of global stocks to buy as a means diversifying your portfolio.
In simplest terms, Mercadolibre is the eBay of South America, offering an online auction marketplace to market where eBay isn’t firmly present. Make no mistake though. Mercadolibre is the real deal. It’s third-quarter revenue was up 61% year-over-year, and between last year’s growth streak and plenty of enthusiasm from the analyst community, MELI shares more than doubled in 2017.
Investors with their fingers on the pulse of the e-commerce market will likely know Amazon.com (AMZN) is eyeing a deeper penetration of the Latin American market, posing a threat to Mercadolibre’s market share there.
It’s not a massive concern though. Not only has Amazon not done well outside of North America — its foreign e-commerce efforts have not only struggled, but are losing more and more money — it’s not captured nearly enough market share to prove disruptive for any existing player. Indeed, it’s been speculated that Mercadolibre could actually be an Amazon acquisition target.
This article is from James Brumley of InvestorPlace. As of this writing, Brumley did not personally hold a position in any of the aforementioned securities.
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