While isolationism and nationalism appear to be rising themes in global politics, with the investing game, diversity is a core strength, thus boosting the narrative of international stocks. Fundamentally, going abroad for profits may provide risk management. Just like you wouldn’t put all your money in one place, it might not be ideal to bet only on U.S. securities.
Second, global stocks offer exposure to new opportunities. While placing wagers on the same horse as everybody else may appear the sensible choice, in many cases, such heavy volume can lead to limited rewards. Also, a possibility exists of significant disappointment (think back to the legal cannabis hype). By tapping into foreign markets, you’re walking the path less traveled. That could lead to superior returns.
Also, it’s possible that different countries could be tied to different economic cycles. And if not, they may be better positioned in certain growth markets than American firms. With these factors in mind, investors should take a look at these international stocks.
One of the biggest international stocks to get your hands on, Toyota (NYSE:TM) admittedly might seem a boring idea. I mean, let’s be honest here. A company that specializes in cars like the Corolla or Camry won’t generate the kind of buzz that an exotic car brand would. At the same time, Toyota forged a reputation – aside from the recent Daihatsu hiccup – for quality and reliability.
Fundamentally, Toyota may be well positioned to dominate in the next phase of the electric vehicle market. Sure, the company has been slow – notoriously slow – in responding to the EV evolution. And yes, you can easily make the case that Tesla (NASDAQ:TSLA) plucked the low-hanging fruit. Here’s the thing, though. Toyota specializes in serving the middle-income household.
Given its vast dealership network, global infrastructure and brand reputation, it can potentially lead in the expansion cycle of the EV industry. Notably, as awesome as Tesla EVs are, they suffer from poor quality control. In that regard, Tesla is the anti-Toyota. The Japanese automaker can use this dynamic to its advantage, making it one of the global stocks to buy.
Based in Brazil, Embraer (NYSE:ERJ) is a multinational aerospace corporation. Per its public profile, the company designs manufactures, and sells commercial, military, executive, and agricultural aircraft. As well, it provides leasing and aviation support services. At the time of writing, it appears ERJ will end the year up around 74%. That’s an impressive performance and it could get even better next year.
On an extraordinarily cynical level, Russia’s invasion of Ukraine could help ERJ become one of the intriguing international stocks. Obviously, geopolitical concerns have skyrocketed following the wanton invasion. And there’s also the element that Russia’s military industrial complex has lost face with its nation’s forces to subdue a much smaller country immediately.
On a more palatable level, if the Federal Reserve lowers interest rates, the move could trickle down to increased business activities. If so, Embraer could see sales of its executive jets rise. Adding to the enticing profile, ERJ trades at only 15.27X forward earnings. In contrast, the sector median stands at 17.15X.
Lastly, analysts rate ERJ a strong buy with a $20.75 price target, projecting 12% upside.
Based in Singapore, Sea (NYSE:SE) is a technology conglomerate. From its corporate profile, Sea features three business units: Shopee, an e-commerce platform, SeaMoney, its financial technology (fintech) arm, and Garena, its gaming development and publishing unit. While one of the more compelling international stocks – especially during the early phase of the Covid-19 crisis – SE stumbled badly from its highs.
Not only that, the recent performance has not provided much encouragement. In the past 52 weeks, SE gave up about 24% of its equity value. That said, in the trailing five sessions, SE swung up roughly 13%. Therefore, it could be one of the global stocks to consider if you’re the speculating type. Fundamentally, Sea could rise from relevancies tied to the burgeoning Southeast Asia market.
In particular, the region’s Internet economy offers a massive total addressable market. Despite some recent challenges, economists still project this ecosystem to hit a valuation of $1 trillion by 2030. Because Sea is positioned favorably, analysts rate shares a moderate buy. Finally, their average price target stands at $54.52, implying 35% growth potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.