Following the initial devastation of the novel coronavirus, several stocks, including those with unfavorable outlooks, soared. But recently, benchmark indices, even those levered to the extremely hot technology sector, started to print red ink. As a result, many have gone to the sidelines. However, intrepid buyers may want to consider international companies to invest in.
Why? We live in a global economy. While I understand that a good chunk of the American electorate consider that phrase fighting words, it’s just simple fact. Sure, a victorious President Donald Trump will prosecute China, but don’t forget: We’re all in this together. Hurting China means killing American jobs. That’s why hundreds of CEOs urged Trump to resolve the trade war last year.
Another reason to consider international companies to invest in is that the U.S. market could be stretched. But our home bias may have us zeroing in on domestic, familiar names when we should be looking abroad. Here’s what Luo Zuo, associate professor at Cornell University’s Samuel Curtis Johnson Graduate School of Management, had to say:
“When the degree of foreign aversion is high in a given country, investors place a high valuation on domestic equity, which results in a lower expected return. … Our findings suggest that if the investors’ objective is to construct a mean-variance efficient portfolio, investors should diversify their holdings internationally, even if doing so might create some feeling of regret when domestic equity outperforms foreign equity.”
The fact that the major indices soared near or above record highs during this unprecedented pandemic is a sign that the best value may not be at home.
Instead, you may want to consider these global companies to invest in:
- Sony (NYSE:SNE)
- Fast Retailing (OTCMKTS:FRCOF)
- Tata Motors (NYSE:TTM)
- Alibaba (NYSE:BABA)
- Dollarama (OTCMKTS:DLMAF)
- Fortis (NYSE:FTS)
- Cemex (NYSE:CX)
- Nornickel (OTCMKTS:NILSY)
- Sibanye Stillwater (NYSE:SBSW)
Companies to Invest In: Sony (SNE)
I’m going to start off this list of companies to invest in with a global firm with which I’m very familiar. While Sony has lost much relevance as Apple (NASDAQ:AAPL) launched its various smart devices, the Japanese consumer electronic firm has made a serious comeback.
For most folks — especially younger investors — they’re likely picking SNE stock for its underlying PlayStation console. And that’s not a bad bet considering that more than 100 million units of the PS4 have been sold since its introduction. With demand for gaming soaring due to the novel coronavirus shutdowns, I am optimistic about its upcoming PS5 debut.
However, that’s not the only catalyst driving SNE stock. Earlier this year, Sony shocked the world at the Consumer Electronics Show when it debuted its Vision-S prototype electric vehicle. Look, it was no secret that Sony was working on autonomous vehicle technology. Management just forgot to mention that the organization was also building the vehicle itself.
Now, I’m not sure if the Vision-S will hit the market as a Tesla (NASDAQ:TSLA) rival. Chances are, the company just wanted an exclusive platform to continue its autonomous testing. Nevertheless, this has excited people who are looking for compelling companies to invest in.
Fast Retailing (FRCOF)
Staying in the same country, one of the most powerful names in retail is perhaps an organization you may not have heard about. Though Fast Retailing currently trades in the over-the-counter market, FRCOF stock commands a whopping price tag over $600. However, in my view, it’s worth it for the ultra-popular Uniqlo brand.
First, let me just say that Uniqlo has absolutely taken over the Japanese apparel market. Further, it is catching on worldwide. From 2016 to 2019, Uniqlo’s brand value has skyrocketed over 63% to just under $12 billion. Analysts project that the brand will hit nearly $12.9 billion by the end of this year.
That’s just phenomenal growth when many apparel companies in the U.S. are struggling, making FRCOF stock a worthy consideration for companies to invest in.
Companies to Invest In: Tata Motors (TTM)
Due to the severe impact of the novel coronavirus, it’s easy to forget what would otherwise be groundbreaking news. For the first time since 1967, India and China had a border clash in the Himalayan Galwan Valley in June. Following the incident, both sides have bolstered troops in the region, raising fears of a military conflict.
Unfortunately, this tension was inevitable due to India’s rise as a true economic power. If the U.S. is going to maintain its influence in the broad Asian region, it will do well to partner with India much more closely. Further, individuals can do their part by investing in companies like Tata Motors.
Admittedly, TTM stock may not appeal to some folks because you would expect car sales to decline during a recession. However, a counterargument is that this crisis is unlike any other. Right now, we’re experiencing a K-shaped recovery where the rich get richer and everyone else gets poorer.
When I say that, most people are thinking about Amazon’s (NASDAQ:AMZN) Jeff Bezos. But even for high-earning office workers, the pandemic has been a boon. Now, they get to collect a sweet salary and “work” from home. Therefore, I like TTM stock as one of the intriguing global companies to invest in, especially because of its underlying Jaguar Land Rover premium automotive brand.
As everyone knows, China is hardly a popular country within the U.S. According to a Pew Research Center poll, most Americans fault China for the spread of Covid-19. In fact, 74% of Americans have an unfavorable view of the world’s second-biggest economy. Therefore, Chinese firms do not rank highly in terms of sentiment for companies to invest in.
But profitability potential? That’s a different story, as Alibaba can attest. Despite its home nation suffering devastating losses from the coronavirus, BABA stock has been a big winner, gaining nearly 52% on a year-to-date basis. I’m sure this will outrage many Americans. However, here’s my take on this development.
I don’t think it’s debatable that the communist government in China has been responsible for terrible breaches in human rights and international dealings. Nevertheless, Americans need to take responsibility for the actions of our political elite over the past few decades. After all, the Chinese did not steal our jobs — our American corporations sold us out to them!
Sure, BABA stock may seem some pain under Trump’s second term. Then again, with our country riled with disasters, Alibaba could end up being a source of stability.
Companies to Invest In: Dollarama (DLMAF)
With Dollarama, we’re going to bring this list of companies to invest in closer to home in Canada, or as my friend and fellow InvestorPlace contributor Will Ashworth might call it, “America Part Deux.” All joking aside, DLMAF stock has significant implications for our future.
If you’re on the pessimistic side regarding the novel coronavirus and its possible long-term impact, Dollarama is basically the Canadian version of Dollar Tree (NASDAQ:DLTR) or Dollar General (NYSE:DG). Coincidentally, I like both of these names as part of my “just in case” list of stocks to buy. Certainly, everyone loves discounts, and even more so during hard times. This applies to Canadians too, which is why you should consider DLMAF stock.
Also, I’m not entirely sure if our northern neighbors can simply ignore what’s going on south of their border. Yeah, Americans are nuts sometimes, but what’s good for us is good for them. But the opposite is also true, which is why you’ll want to consider this discount retailer.
Given all that has transpired this year, 2020 has been a blur for me. I’m sure I’m not the only one feeling this way.
We’re in a crazy world where people on both ends of the political aisle are firmly entrenched and will go down with the ship if it comes to that. And this is an incredibly long setup for Canadian electric utility firm Fortis and FTS stock.
Here’s the harsh reality. As I just stated, people are going nuts despite the entire Western world living in relative peace and prosperity. But in this highly charged environment, if you want absolute chaos, just wait and see what happens when the lights don’t turn on. Therefore, I look at FTS stock as an international backstop for one’s portfolio.
Also, if I’m not mistaken, if Fortis goes down, Will Ashworth won’t be able to connect online and publish his InvestorPlace articles. So that’s another benefit to supporting this utility firm.
Companies to Invest In: Cemex (CX)
Following the initial strike of the novel coronavirus on our shores, the Trump administration took action to suspend worker inflows from foreign countries. More recently, with coronavirus cases worsening throughout the globe, every country had an incentive to close their borders.
However, the common belief is that once circumstances normalize, immigration into the U.S. will increase. Indeed, we could see an influx of people due to pent-up demand. And that concept worries conservatives, especially if former Vice President Joe Biden wins the November election. Further, labor outflows would not exactly be positive for Mexican multinational building materials company Cemex.
Nevertheless, I’m going to take the contrarian approach to CX stock as one of the international companies to invest in. According to a 2015 Pew report, more Mexicans are “leaving than coming to the U.S.” since the end of the Great Recession. Further, a Business Insider report from last year suggests the same dynamic is at play.
Frankly, even if Biden wins, the U.S. will likely face such severe economic challenges that for the first time in a long time, the Democrats will not be able to pander to immigration advocates. That may translate to a younger and more robust labor force in Mexico, boosting CX stock.
With China absorbing most of the American public’s anger, Russia has been a huge geopolitical beneficiary. Prior to the pandemic, Trump’s adversaries focused on his alleged connections to Russian powerbrokers. Further, accusations that the Russian government is actively seeking to undermine American democracy hasn’t made that Russian companies to invest in a popular topic.
Perhaps that sentiment might not change drastically, given our vast political divide. However, Nornickel and NILSY stock may be a play that you’ll want to plug your nose and buy. That’s because the mining firm is the world’s leading producer of palladium.
As you may know, palladium is crucial in the manufacturing of catalytic converters. With so much enthusiasm for electric vehicles, you might be tempted to ignore this precious metal. However, the incorporation of EVs may take much longer than you think. As Bruce Ikemizu, chief director of the Japan Bullion Market Association pointed out, combustion engines have been optimized over the past 100 years.
Moreover, traditional cars have cheaper upfront costs, making them ideal in a recession. Thus, palladium demand will stay with us and that bodes well for NILSY stock.
Companies to Invest In: Sibanye Stillwater (SBSW)
Finally, I’m going to finish this list of companies to invest in by discussing one of the top firms in South Africa — Sibanye Stillwater. As the world’s largest primary producer of platinum, Sibanye has always been relevant. Typically, one of the industrial uses of platinum is as coating for electrodes.
In addition, platinum has strong implications for clean energy technologies, especially fuel cell vehicles (FCVs). According to Ikemizu, “An FCV uses almost 10 times more platinum within a catalyst than a diesel engine.” If that’s the case, we could see a strong demand uptick for platinum, thereby driving the case for SBSW stock.
As well, platinum has established monetary value. Fundamentally, it’s much rarer than gold, yet gold is currently price around $1,950. On the other hand, platinum sells for roughly half that at $940. Of course, there’s no guarantee that investor demand will shift toward platinum. However, the white metal represents a crazy discount relative to gold.
Either way, with industry demand likely to rise in a post-crisis environment, SBSW stock is worth consideration.
On the date of publication, Josh Enomoto was long SNE and the precious metals mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.