Welcome to my blog where I share insights, strategies, and tips on how to trade the stock market. In this post, I will be discussing the top five international stocks to invest in for growth. As a trader, I believe in a conservative and research-driven approach to investing, and these stocks have been selected based on my criteria for growth-based investing.
Many traders are intimidated by the idea of investing in international stocks, fearful of the risks involved. However, investing in global markets is a great way to hedge against a downturn in the domestic market. The right international stocks can provide diversification of portfolio and a higher return on investment, making it a great opportunity for traders who are looking for growth. In this post, I will share my expert insights on the top five international stocks you can invest in for growth and diversification.
Overview of International Stocks
International stocks are any company that operates outside of its home country, with its stock trading on a foreign exchange. These stocks provide exposure to global markets, allowing investors to diversify their portfolio and reduce risk by spreading their holdings across borders. As a trader, understanding the international stock market can be beneficial as it can open up new opportunities for portfolio diversification, risk management, and earning potential.
Investors can purchase international stocks directly from the foreign exchange or through an American Depositary Receipt (ADR), which allows U.S. investors to invest in international stocks without having to buy shares in the foreign exchange. ADRs are adjustable to an equally weighted basket of stocks and an index.
Explanation of Growth-based Investing Strategy
Growth-based investing strategy focuses on investing in stocks that show high growth potential. These types of investments are often seen as high risk, but they offer the potential for higher returns. Growth-based stocks often come from companies that are rapidly increasing their revenue and earnings.
Growth-based investors avoid traditional valuation metrics like P/B and P/E ratios. Instead, they look for companies that are growing their earnings per share, increasing their market share, and making strategic investments that drive growth. This strategy is particularly suitable for those traders looking to invest for a long-term period.
In the following pages, I will discuss in detail my top five international stocks to invest in for growth.
Criteria for Selecting the Top 5 Stocks
Selecting the right international stocks can be a daunting task. To find the top five stocks to invest in for growth, I used a set of criteria to ensure that the selected stocks have a high potential for growth. Among the criteria used include market capitalization, revenue growth rate, earnings growth rate, price to earnings ratio, dividend yield, and industry trends.
The selected stocks must have a market capitalization of over $10 billion to ensure liquidity. In addition, the companies must have demonstrated consistent revenue and earnings growth over the past five years. We also looked at the stock’s historical price to earnings growth ratio (PEG), ensuring they’re reasonably priced based on earnings growth. Lastly, we considered dividend yield, ensuring a long-term, stable investment.
First Recommended Stock and Analysis
The first international stock on our list is Alibaba Group Holding Limited (BABA), the Chinese multinational technology company. Alibaba is one of the most prominent e-commerce platforms globally, with businesses in China, Southeast Asia, and the United States. With a current market capitalization of over $480 billion, Alibaba has a solid revenue growth rate of 38.8% over the past five years, supported by their international expansion strategy.
Alibaba’s earnings growth rate stands at 28.5%, with an estimated earnings per share (EPS) growth of 21.2% in the next five years. This growth potential is supported by the growth of China’s middle class, a significant contributor to the company’s revenue. Alibaba’s P/E ratio of just over 20X (significantly lower than the industry average) also adds to its growth potential.
Second Recommended Stock and Analysis
The second international stock on our list is Shopify Inc. (SHOP), a Canadian e-commerce platform that specializes in online sales for small and medium-sized businesses. Shopify allows merchants to set up an online store and sell products on multiple channels. With a current market capitalization of over $185 billion, Shopify is positioned for significant growth in the future, supported by the growth of e-commerce worldwide.
Shopify’s revenue growth rate stands at 55.8% over the past five years, and their estimated earnings growth rate in the next five years is 31.66%. With a P/E ratio of over 133X, Shopify is considered a growth stock. The company is well-positioned to take advantage of market trends as e-commerce continues to grow in popularity.
In the next page, I will discuss the third recommended stock and analysis, followed by the final two recommended stocks.
Third Recommended Stock and Analysis
The third international stock on our list is MercadoLibre Inc. (MELI), an Argentine online marketplace and payment system. The company’s operations extend to over 20 countries in Latin America, and it is considered to be the “Amazon of Latin America.” With a current market capitalization of over $98 billion, MercadoLibre has experienced consistent growth over the years, supported by its dominant position in the Latin American e-commerce market.
MercadoLibre’s revenue growth rate stands at 43.3% over the past five years, and their estimated earnings growth rate in the next five years is 31.6%. With a P/E ratio of slightly over 196X, MercadoLibre is priced high, indicating high growth potential. The company’s growth is supported by the growth of the Latin American middle class, which represents a significant percentage of the company’s revenue.
Conclusion and Final Two Recommended Stocks
Investing in international stocks can be a great way to diversify your portfolio and achieve long-term growth potential. As we have seen, the potential for growth in the international market is vast, and traders need to take advantage of it to accelerate their investment earnings.
In conclusion, Alibaba, Shopify, and MercadoLibre are the top three international stocks to invest in for growth. Other notable recommendations include Taiwan Semiconductor Manufacturing Co. Limited (TSM), the world’s largest independent semiconductor foundry, and ASML Holding N.V. (ASML), a Dutch manufacturer of semiconductor equipment. These stocks have demonstrated consistent growth over the past several years and have positioned themselves for strong gains in the future.
Remember, as with any investment, it’s essential to do your due diligence and understand the risks involved before investing in any of these stocks. With growth-based investing, a long-term perspective and commitment are necessary for long-term gains. Start today with these recommendations and stay updated on the market trends to maximize your portfolio’s growth potential.