Don’t overlook investment gems simply because they are from overseas. While the U.S. market undeniably commands attention globally, staying solely within its confines may cause investors to miss out on promising global opportunities. Thankfully, many of these international stocks are undervalued at the moment.
If you’re looking to diversify your portfolio and capitalize on rising stars, consider investing in companies such as Nu Holdings (NYSE: NU), StoneCo (NASDAQ: STNE), and Sea Limited (NYSE: SE). Here’s why these international businesses are compelling investment prospects right now:
1. Nu Holdings
Nu Holdings, cited by TopMobileBanks as the world’s largest digital bank by capital raised, has revolutionized financial inclusion in Brazil. In just one year, the company’s flagship, NuBank, extended first-time credit cards to nearly 6 million Brazilians who were previously unbanked.
With around half of Brazil’s adult citizens now using NuBank, the company is successfully replicating this model in Mexico and Colombia. This strategy has catapulted NuBank’s customer base to 84 million, a 28% spike in one year.
This impressive growth hasn’t escaped Warren Buffett’s Berkshire Hathaway, an early backer. The digital bank’s revenue surged by 71% to $3.5 billion in the first half of 2023, coupled with a net income of $367 million. Its stock has also seen significant gains recently, and its forward P/E ratio of 38 appears reasonable, given its rapid growth and market acceptance.
2. StoneCo
Much like Nu Holdings, StoneCo is a Brazilian fintech firm that caught the attention of Berkshire Hathaway even before its IPO. The company offers a comprehensive suite of fintech and enterprise solutions, akin to those provided by Block’s Square, primarily serving businesses in Brazil.
Although StoneCo faced a severe setback in 2021, losing over 90% of its value, it’s back on a growth trajectory. With revenues touching 5.7 billion reais ($1.2 billion) and a net income of 533 million reais ($110 million) in the first half of 2023, the company has rebounded well. This makes its relatively static stock price and forward P/E ratio of 15 seem like a bargain, especially with a 23% YoY revenue increase anticipated for the next quarter.
3. Sea Limited
Sea Limited, a conglomerate based in Singapore, experienced a sharp decline in its stock price, losing over 90% from its peak. However, this was largely due to setbacks in its gaming and e-commerce segments.
Despite this downturn, SeaMoney, its financial services arm, continued to generate increasing revenues. The e-commerce division, Shopee, has also staged a comeback, particularly in Southeast Asia. The company’s overall revenue rose by 5% to $6.1 billion in the first half of 2023.
The most significant turnaround has been its profitability, recording $418 million in the first half of this year, in stark contrast to a $1.5 billion loss during the same period last year. Recent approvals for its gaming arm, Garena, to recommence operations in India offer additional growth prospects.
With the stock trading near its 52-week low and a forward P/E ratio of 18, now could be an opportune moment to invest, particularly if Garena manages to reverse its declining revenue trend.
While the U.S. remains an investment hotspot, opportunities abound globally. Companies like Nu Holdings, StoneCo, and Sea Limited showcase the kinds of untapped potential that await investors willing to look beyond domestic markets.
The investment landscape is increasingly global, and savvy investors can reap substantial benefits by diversifying beyond U.S. markets. Companies like Nu Holdings, StoneCo, and Sea Limited offer not just growth but also a hedge against domestic market volatility. Their promising financials and unique market positions make them standout options for those looking to broaden their investment horizons. Whether you’re new to international investing or a seasoned veteran, these three companies present compelling reasons to consider going global with your portfolio.
