Exposure to global stocks is a good way to create a well-diversified portfolio. Commonly, investors diversify with a mix of dividend stocks (low-beta stocks) and growth stocks (relatively high-beta stocks).
In the last 12-24 months, investment in speculative penny stocks has also gained traction, but global stocks provide a significant advantage.
It’s worth noting that the United States and Europe are considered developed markets. Regions like Asia, Latin America, among others are developing economies. There are emerging companies from these regions that can be future blue-chip stocks. Exposure to these stocks at an early growth stage can deliver multi-fold returns over the long term.
At the same time, there are several blue-chip global stocks that can be considered for the long-term portfolio. In particular, companies that are high on innovation.
Let’s talk about four global stocks that are worth considering for the next five years. These companies have positive industry tailwinds to support growth and stock upside.
- Taiwan Semiconductor Manufacturing (NYSE:TSM)
- XPeng (NYSE:XPEV)
- AstraZeneca (NASDAQ:AZN)
- Sea Limited (NYSE:SE)
Global Stocks to Buy: Taiwan Semiconductor Manufacturing (TSM)
TSM stock has been sideways for the last 12-months. The correction is a good opportunity to accumulate the stock, which is likely to break out on the upside.
With the ongoing chip shortage globally, Taiwan Semiconductor is among the leading companies boosting investments. For the current year, the company plans to invest $40 to $44 billion towards chip manufacturing.
I also believe that Taiwan Semiconductor has an edge over its peers when it comes to technology. In November 2021, TSMC and MediaTek unveiled the world’s first 7-nanometer 8K digital TV flagship system-on-chip. The company has already unveiled chips for high performance computing products.
For Q4 2021, the company reported revenue growth of 24.1% on a year-on-year basis to $15.74 billion. For the same period, the company reported a healthy net profit margin of 37.9%. With the investments lined up for 2022, it seems likely that robust revenue growth will sustain.
Therefore, TSM stock looks attractive at a forward price-to-earnings ratio of 27.6. Additionally, the stock offers a healthy dividend yield of 1.59%.
Overall, TSM stock is among the top global stocks to consider. The technological edge is likely to ensure that the stock is a long-term value creator.
If I had to choose one Chinese stock in my portfolio of global stocks, it would be XPEV stock. The electric vehicle industry has multi-year tailwinds and XPeng looks well-positioned to capitalize.
Further, XPeng is making big investments on the innovation front. By 2024, the company plans to unveil a flying car that can also operate on roads.
The company has already been reporting robust vehicle deliveries. For 2021, XPeng reported total deliveries of 98,155 vehicles. On a year-on-year basis, deliveries were higher by 263%. It seems likely that this growth momentum will sustain in 2022 and 2023.
The XPeng P5 was launched in China in September 2021. In the current year, G9 is scheduled for commercial deliveries from Q3 2022. These new models will contribute to delivery growth.
Further, G9 has been designed with a focus on making inroads in the international markets. With XPeng likely to enter into more European markets in 2022, deliveries growth will be supported.
As of Q3 2021, XPeng reported cash and equivalents of $7.0 billion. The company, therefore, has ample financial resources for investment in product development and manufacturing expansion.
Global Stocks to Buy: AstraZeneca (AZN)
While buying low-beta stocks for the long-term portfolio, AZN is worth considering among the global stocks. Besides providing investors with a dividend yield of 1.5%, AZN stock has also trended higher by 14% in the last 12-months.
For Q3 2021, AstraZeneca reported revenue growth of 28% to $25.0 billion. Excluding the impact of the Covid-19 vaccine, growth was 17%. Robust growth is a key reason to like the company.
It’s also worth noting that AstraZeneca currently has 175 projects in the pipeline. The therapeutic areas include oncology, respiratory, immunology, among others. With several projects in phases two and three of development, it’s likely that healthy revenue growth will sustain in the next few years.
Emerging markets are another growth catalyst for the company. For Q3 2021, the company reported total revenue (excluding Covid-19 vaccine revenue) of $7.5 billion from these markets.
With healthy growth in China and other emerging markets, regional diversification implies that the stock is still attractively valued.
For fiscal 2021, AstraZeneca reported an operating cash flow of $4.5 billion. With annual OCF visibility of $6.0 billion, the company is positioned to deleverage and accelerate investments in the product pipeline.
As cash flows swell further in the coming years, dividend growth seems likely on a sustained basis.
Sea Limited (SE)
SE stock has been on a sharp downtrend after touching all-time highs of $372 in October 2021. Currently, the stock trades at $147 and it seems that the sell-off is over as well as overdone.
For investors bullish on the Southeast Asian e-commerce market, SE stock is worth considering for the long term.
Sea Limited has been on a high-growth trajectory. For Q3 2021, the company reported revenue growth of 121.8% on a year-on-year basis to $2.7 billion. E-commerce revenue was 134.4% higher by $1.5 billion.
However, the stock has corrected due to cash burn concerns. In the digital entertainment segment, the company reported an adjusted EBITDA of $715.1 million. The e-commerce segment adjusted EBITDA loss was $683.8 million. With operating leverage, as cash burn declines, Sea Limited is likely to be a cash flow machine.
Another growth segment for the company is digital financial services. For Q3 2021, the total payment volume for the company’s mobile wallet was $4.6 billion. On a year-over-year basis, payment volume increased by 111%.
Clearly, Sea Limited has witnessed strong growth across segments. Considering the potential in the Southeast Asian markets, the e-commerce growth is likely to sustain. The deep correction, therefore, presents an attractive buying opportunity.
On the date of publication, Faisal Humayun did not hold (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 modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.