It’s important to have a well-diversified portfolio. and within equities, diversification can be in the form of balanced exposure to high growth stocks and dividend stocks, hometown stocks or global stocks.
James Angel, associate professor at Georgetown University’s McDonough School of Business, wrote about how diversification can help ride out uncertain markets in an email to InvestorPlace. He wrote, “A well diversified portfolio, such as an index fund that tracks the whole market, will have firms that both produce and consume commodities affected by shocks. Thus, diversification is the first line of defense against price shocks. Of course, some shocks such as the pandemic affect almost everything in the same way. In such cases, having some of your assets in less risky assets such as money market instruments and short-term bonds, will give you the liquidity to clean up when everyone else panics. ”
In general, high-growth stocks are also high beta stocks and maximize portfolio returns when markets trend higher. On the other hand, dividend stocks are low beta stocks and help in capital preservation when market sentiment is bearish. Another way of diversification within the equity portfolio is exposure to global stocks.
Overall, there are hundreds of attractive growth stories in the equity segment globally. And while some stocks are listed in regional exchanges, there are others that are listed in the United States. I believe that investors can consider a portfolio within a portfolio of global stocks.
In turn, I will discuss seven global stocks with a focus on growth stocks from different regions. Some of these stocks have already been value creators. But I believe that there is further rally impending for these global stocks.
With all of that in mind, let’s talk about these names from industries that have positive tailwinds.
- Coupang (NYSE:CPNG)
- Sea Limited (NYSE:SE)
- Valneva SE (NASDAQ:VALN)
- XPeng (NYSE:XPEV)
- RADA Electronic (NASDAQ:RADA)
- Equinor (NYSE:EQNR)
- CureVac (NASDAQ:CVAC)
Now, let’s dive in and analyze each one.
Global Stocks to Buy: Coupang (CPNG)
The South Korean e-commerce company seems worth considering for a diversified long-term portfolio. After listing, CPNG stock touched a high of $69. However, there has been a meaningful correction and the stock currently trades at nearly $39.
For the first quarter of 2021, Coupang reported healthy revenue growth of 74% year-over-year to $4.2 billion. This growth was driven by a 21% increase in active customers to 16 million. At the same time, the net revenue per active customer increased by 44%.
Coupang did report an adjusted EBITDA loss of $133 million. Operating level losses widened due to expansion in fulfillment center capacity along with investment in technology and infrastructure. The e-commerce business model has proved to be a cash cow and near-term cash burn is not a concern.
In terms of the market size, Korea’s total e-commerce spend was $128 billion in fiscal year 2019. This is expected to expand to $206 billion by FY2024. However, the company’s addressable market is bigger. The online grocery and customer food service segment are fast expanding and Coupang has growing presence in these segments.
Recently, Deutsche Bank upgraded CPNG stock to “buy” from “neutral.” Given the strong growth and diversified business offering, the stock is attractive at current levels.
Sea Limited (SE)
Staying with e-commerce, Sea Limited gives investors exposure to the e-commerce, gaming and digital financial services in Southeast Asia. The Singapore based company has been on a high-growth trajectory and SE stock has also surged by 260% in the last one-year.
In the e-commerce segment, the company reported revenue of $2.2 billion in FY2020, which was higher by 159.8% on a YOY basis. For the current year, the company expects revenue growth of 112.3%. However, the segment also reported an adjusted EBITDA loss of $1.3 billion for FY2020.
On the other hand, the digital entertainment segment reported adjusted EBITDA of $2 billion for FY2020. Currently, the cash burn in the e-commerce and digital finance segment is being offset by strong EBITDA numbers from the entertainment business.
The digital financial services have also witnessed strong growth traction. Just for Q4 2020, there were more than 10 million mobile wallet users in Indonesia. Once EBITDA losses narrow in the e-commerce and digital finance segment, Sea Limited will be positioned to generate robust cash flows.
As of FY2020, Sea Limited reported cash and equivalents of $6.2 billion. This gives the company ample financial flexibility to pursue aggressive growth. SE stock has corrected in the recent past and I see this as a good accumulation opportunity.
Global Stocks to Buy: Valneva SE (VALN)
Valneva is a French company and a potential dark-horse in the race for the vaccine against Covid-19. VALN stock was recently listed on the NASDAQ exchange and the current market capitalization of $1.45 billion looks attractive.
As an overview, Valneva is currently pursuing clinical trials for the first inactivated Covid-19 vaccine in Europe. The data from Phase one and two has been encouraging and the company has initiated Phase three trials in April 2021.
Valneva already has a deal with the U.K. government to supply up to 190 million doses of the vaccine through FY2025. The deal is worth 1.4 billion euros. Valneva is also in discussion with other European countries for a potential deal.
Further, the company is already in Phase 3 of a single-shot Chikungunya vaccine. For this, the company has already been designated FDA fast track. Additionally, Valneva has partnered with Pfizer (NYSE:PFE) for a Lyme disease vaccine. The company has reported positive initial results from Phase two studies.
Clearly, the company has an attractive advanced pipeline of vaccines. The next few years are likely to be associated with robust revenue growth and cash flow upside. VALN stock is therefore worth considering at current levels of $31.
China is the biggest electric vehicle market and will remain the largest market over the next ten years. Among Chinese EV companies, XPeng looks like an attractive investment option.
Earlier this year, XPEV stock touched a high of $74.5. However, profit booking coupled with concerns on chip shortage has resulted in a sharp correction in EV stocks. At current levels of $26.1, the stock looks attractive.
For Q1 2021, XPeng reported vehicle deliveries of 13,340, which was higher by 487.4% YOY. With retail expansion in China and international expansion in Europe (currently Norway), the company is positioned for sustained growth in deliveries.
Further, in April 2021, the company debuted its third production model, the XPeng P5 smart sedan. The EV will be equipped with automotive-grade LiDAR technology. New model launches will also contribute to growth in vehicle deliveries and revenue upside.
From a financial perspective, XPeng reported vehicle margin of 10.1% for Q1 2021. For the comparable period in FY2020, vehicle margin was negative of 5.3%. Clearly, with operating leverage, the company is positioned to deliver healthy EBITDA and cash flows in the coming years.
XPeng also reported a cash buffer of $5.5 billion as of Q1 2021. This will give the company ample financial flexibility for investment in manufacturing expansion and innovation.
Global Stocks to Buy: RADA Electronic (RADA)
The Israel based company is focused on tactical radars, which has a total addressable market in excess of $6.0 billion. RADA stock has surged by 136% in the past year, and looks good for further upside.
The company is already on a high growth trajectory with FY2020 revenue surging by 105% YOY. For the current year, the company expects revenue growth in excess of 70%.
For Q1 2021, Rada also reported an adjusted EBITDA margin of 19% as compared to 6% in Q1 2020. As margin expands, the company is positioned to generate healthy long-term cash flows.
It’s worth noting that for Q1 2021, the company reported new orders worth $24 million. YOY, order growth was 50%. As the other book swells, the company is well positioned for strong top-line growth beyond the current year.
According to the company, there is “growing traction from European and Middle-Eastern markets.” Regional diversification will ensure that the company’s growth remains strong and the client base expands further.
Considering the growth outlook, RADA stock looks attractive at a forward price-to-earnings-ratio of 28.4.
With oil trending higher, it’s a good time to hold some energy stocks in the portfolio. Norway based Equinor is among the top names in the oil and gas sector. EQNR stock has been trending higher with an upside of 41% in six months. This momentum is likely to sustain if Brent continues to trade around $70 per barrel.
The company’s assets are a key reason to like Equinor. With six billion BOE of resources, Equinor is positioned for sustained production growth. For the next five years, the company has guided for annual production growth of 3%.
Another factor that makes Equinor attractive is low break-even projects. At a break-even of $35 per barrel, the company is positioned to deliver robust operating and free cash flows in the coming years. Equinor currently has a dividend yield of 2.3% and it’s likely that dividends will increase if oil sustains at higher levels.
Equinor has also been making investments in the renewable sector. By FY2026, the company expects renewable energy capacity in the range of 4GW to 6GW. Furthermore, by FY2035, the company expects to increase renewable capacity to 14GW (mid-range).
Overall, EQNR stock looks like a value creator with quality assets, a strong balance sheet and a healthy track record of dividends.
Global Stocks to Buy: CureVac (CVAC)
The German clinical-stage bio-pharmaceutical company is another name among global stocks to add to the portfolio. CVAC stock has trended higher by 53% in the last six months. Further upside seems likely considering the progress related to the vaccine against Covid-19.
CVnCoV, which is the company’s Covid-19 vaccine candidate, has completed recruitment for Phase 2b and Phase 3. The vaccine has already demonstrated protection against the South African variant. With efficacy data and application for regulatory approval due in Q2 2021, the stock seems attractive.
Another positive trigger is that the company has joined hands with GlaxoSmithKline (NYSE:GSK). This is for the development of second-generation Covid-19 vaccine. The pre-clinical trials have already shown that the vaccine has “high immunogenicity against virus mutations.”
Besides Covid-19, the company has a deep pipeline of pre-clinical and clinical studies. This includes indications like yellow fever, rabies and other infectious disease. In addition, the company also has a pipeline for oncology and protein therapy.
Coming back to the vaccine against Covid-19, the company currently has a manufacturing capacity of 300 million doses. By FY2022, the manufacturing capacity is likely to ramp-up to one billion doses. Therefore, the company is positioned for strong top-line growth once the vaccine gets regulatory approval.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.