U.S. markets may look volatile these days, but plenty of investment opportunities are still available for savvy investors, particularly in foreign stocks. With U.S. markets under considerable stress, it may be a great time to look outside our borders to research robust international shares.
Foreign stocks enhance portfolio diversification and allow investors to profit from improving economic conditions in other nations. The rapid growth of international economies and increasing productivity have led to increased purchasing power worldwide. As a result, foreign stocks are increasingly gaining traction.
Global shares grew by double digits in 2021. Expansionary monetary policies from leading central banks around the world, as well as government stimulus programs, pushed global financial markets higher.
In 2021, the FTSE All-World Stock index soared over 16.5% in dollar terms. That rate exceeded the previous year’s gain of about 14%. Despite the current global volatility, market analysts are optimistic that global markets will continue to do well in the quarters ahead.
With that said, here are 7 hot foreign stocks to buy now for lucrative returns:
- British American Tobacco (NYSE:BTI)
- Global X Copper Miners ETF (NYSEARCA:COPX)
- Himax Technologies (NASDAQ:HIMX)
- iShares International Select Dividend ETF (BATS:IDV)
- STMicroelectronics (NYSE:STM)
- Toyota (NYSE:TM)
- Vestas Wind Systems (OTCMKTS:VWDRY)
Foreign Stocks: British American Tobacco (BTI)
- 52 Week Range: $33.62 – $47.24
- Dividend Yield: 6.91%
London-headquartered British American Tobacco is a leading tobacco company. It manufactures cigarettes and reduced-risk products, such as vapor, tobacco heating products, and oral tobacco products. Among the popular cigarette brands are Lucky Strike, Camel, and Newport.
British American Tobacco released 2021 financial results on Feb. 11. Total revenue came in at $34.84 billion, up 6.9% year-over-year (YOY). Profit from operations stood at $13.9 billion, up 5.2% at constant exchange rates. The company generated a free cash flow of $3.45 billion.
On the metrics, Chief Executive Officer (CEO) Jack Bowles remarked, “It has been a pivotal year: we accelerated New Category revenue, with growth of over 50%* and reached a total of 18.3m consumers (up 4.8m) of our non-combustible products.”
BTI stock is also an attractive consumer stock for value investors due to its dividend yield of almost 7%. Shares currently hover around $41 territory, up 10.7% year-to-date (YTD). They are trading at 9.6 times forward earnings and 3.05 times trailing sales. The 12-month median price forecast for British American Tobacco stock stands at $52.99.
Global X Copper Miners ETF (COPX)
- 52 Week Range: $32.85 – $46.96
- Dividend Yield: 1.22%
- Expense Ratio: 0.65%
My second choice is an exchange-traded fund (ETF), the Global X Copper Miners ETF. It offers exposure to a broad range of copper mining companies worldwide. Over the past few years, copper has emerged as a critical commodity. It has an important role in global decarbonization strategies, such as electric vehicles (EVs) and solar panels.
COPX has 39 holdings and tracks the Solactive Global Copper Miners Total Return Index. The ETF started trading in April 2010 and has roughly $1.77 billion in net assets.
Canadian miners lead the list with 30.2%, followed by Australia with 12.7%, the U.S. with 9.9%, Japan with 8.6%, China with 6.9%, and the U.K. with 5.4%.
The top 10 stocks comprise nearly 53% of the ETF. The leading names on the roster include Canadian mining company Teck Resources (NYSE:TECK), Japan-based metal company Sumitomo Metal Mining (NYSE:SMFG), global resources company BHP Group Limited (NYSE:BHP), Sweden-based high-tech metal company Boliden (OTCMKTS:BDNNY), and Arizona-headquartered miner Freeport-McMoRan (NYSE:FCX).
COPX is up 20% YTD. The fund hit a multi-year high of $46.96 in May 2021 and currently trades at $44 territory. Investors interested in buying Global X Copper Miners may consider a decline toward $39 as a better entry point.
Foreign Stocks: Himax Technologies (HIMX)
- 52 Week Range: $9.48 – $17.30
- Dividend Yield: 2.41%
Taiwan-based Himax Technologies is a fabless semiconductor company that specializes in display imaging processing technologies. Its integrated circuits are used in displays for TVs, laptops, smartphones, and other consumer and automotive electronics.
The chipmaker issued fourth-quarter (Q4) 2021 numbers on Feb. 17. It generated revenue of $452 million, up 64% YOY. Net income came in at $142.4 million, or 81 cents per diluted share, up from $34 million, or 19 cents per diluted share a year ago. Cash and equivalents ended the quarter at $364 million.
Growth over the past year was fueled primarily by robust demand for Himax’s display chips used in smartphones and automotive technologies. Now, analysts believe the metaverse could also become a growth driver. Himax produces the liquid crystal on silicon (LCoS) microdisplays used in augmented reality (AR) and virtual reality (VR).
However, the company anticipates the industry wide foundry capacity shortage to extend through 2022. As a result, management announced revenue guidance, predicting a 5% to 9% sequential decline in Q1 revenue.
HIMX stock hovers at $11 territory, down 31% YTD. Shares are trading at a cheap valuation of 4.5 times forward earnings and 1.4 times trailing sales. The 12-month median price forecast for Himax stock stands at $16.50.
iShares International Select Dividend ETF (IDV)
- 52 Week Range: $29.68 – $34.15
- Dividend Yield: 5.77%
- Expense Ratio: 0.49%
The iShares International Select Dividend ETF focuses on high-quality companies in other developed markets that have provided consistently high dividend yields over time. It started trading in 2007.
IDV, which has 99 holdings, tracks the Dow Jones EPAC Select Dividend Index. EPAC stands for “Europe, Pacific, Asia and Canada,” territories that cover developed markets excluding the U.S.
The top 10 holdings account for roughly 30% of the fund’s net $4.79 billion in assets. Financials lead the list of sectors at 30.94%, followed by Utilities at 19.26%, Materials at 11.95%, Energy at 7.87%, Communication at 7.67%, Consumer Staples at 6.16%, and Industrials at 5.88%.
Among the leading names on the roster are Rio Tinto (NYSE:RIO), British American Tobacco, Naturgy Energy (MCE:NTGY.MC), SwissCom (SWISS:SCMN), Canadian Imperial Bank of Commerce (NYSE:CM), Hang Seng Bank, and Fortescue Metals Group (OTCMKTS:FSUGY).
IDV is up around 2% YTD and the current price supports a yield of 5.77%. Its trailing price-to-earnings (P/E) and price-to-book (P/B) ratios stand at 10.99 and 1.23, respectively.
Foreign Stocks: STMicroelectronics (STM)
- 52 Week Range: $33.30 – $52.15
- Dividend Yield: 0.59%
Switzerland-based STMicroelectronics is one of the largest chip makers in Europe. Products include analog semiconductors, microcontrollers, and sensors used in smartphones and self-driving vehicles.
The semiconductor group is primarily focused on automotive, industrial, and personal electronics markets. I should also note that the French and Italian governments have a 27.5% stake in the company.
STMicro released Q4 2021 metrics on Jan. 27. Net revenue increased 9.9% YOY to $3.56 billion. Net income soared 29% YOY to $750 million, or 82 cents per diluted share, up from $582 million, or 63 cents per diluted share in the prior-year quarter. Cash and equivalents ended the period at $1.97 billion.
The chip group has seen solid performance across all of the end markets that it serves. At present, smartphone firms account for around 30% of STM’s total revenue. In fact, it has 25% exposure to Apple (NASDAQ:AAPL).
Management anticipates overall demand in 2022 to exceed supply. The company forecasts net revenue of $3.5 billion in the first quarter, representing a 16% YOY increase.
STM stock is priced around $37, down 23% YTD. Shares are trading at 13.50 times forward earnings and 3.13 times trailing sales. Meanwhile, the 12-month median price forecast for STMicroelectronics stock is $61.38.
- 52 Week Range: $145.95 – $213.74
- Dividend Yield: 2.58%
Japan-based Toyota is one of the largest car manufacturers worldwide. It sold 2.3 million vehicles in the U.S. alone in 2021.
Toyota announced Q3 FY22 results on Feb. 9. Revenue declined 4.5% YOY to $67.7 billion. Net income came in at $7.1 billion, down more than 20% from the prior-year quarter but above analysts’ estimates. Cash and equivalents ended the quarter at $44.3 billion.
Investors were not pleased to hear that the automaker is falling short of its 9-million-vehicle goal for the current fiscal year. The company cut its annual production target by half a million vehicles due to a semiconductor shortage, as well as rising costs. Yet, the carmaker maintained its full-year profit forecast of $24.3 billion, highlighting the yen’s depreciation among the reasons for its positive outlook.
We should note that Toyota aims to sell 3.5 million EVs per year by 2030. In addition, it has pledged to invest $35 billion in developing 30 battery-powered EVs by 2030.
TM stock hovers around $169, up 18% over the past 12 months. Shares are trading at 9.7 times forward earnings and only 1 time trailing sales. At present, the 12-month median price forecast for Toyota stock stands at $223.72.
Foreign Stocks: Vestas Wind Systems (VWDRY)
- 52 Week Range: $8.10 – $15.00
- Dividend Yield: 0.23%
Our final stock is the Denmark-based Vestas Wind Systems, which manufactures and installs wind turbines. It is the global market leader of onshore wind turbine installations.
Vestas Wind Systems issued 2021 annual numbers on Feb. 10. Revenue increased by 5% YOY to $17.6 billion, driven primarily by growing service business and offshore activity. However, profit for the year declined 77% YOY to $199 million, or 23 cents earnings per share, down from $874.7 million, or 91 cents earnings per share, a year ago. Cash and equivalents ended the quarter at $2.7 billion.
The value of the combined order backlog increased from $49 billion to $53 billion across Power Solutions and Service. However, new orders for wind turbines were down 19% YOY. Rising material costs and supply chain contributed to the decline in operating profits.
VWDRY stock hovers around $9 territory, down 14.7% over the past year. Shares are trading at 90 times forward earnings and 1.45 times trailing sales. The 12-month median price forecast for Vestas Wind Systems stock is $54.69.
On the date of publication, Tezcan Gecgil 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.