3 Must-Buy International Stocks for a Diversified Portfolio

Stocks to buy

While the U.S. may consistently be the best house in the worst block, sometimes, it can be advantageous to consider international stocks. Generally, financial advisors will recommend keeping your bread and butter in what you know; that is, American companies. Still, going abroad can expand horizons and opportunities.

One possible advantage is that most of your peers will likely be targeting U.S.-based securities. That means you can find some underappreciated gems that have a greater upside pathway. Also, because global plays just aren’t getting as much love, many offer compelling valuation multiples.

To be fair, going across borders carries distinct risks. Still, if you’re willing to absorb potential volatility, these are the compelling international stocks to consider.

Dollarama (DLMAF)

Source: BalkansCat / Shutterstock.com

Listed under the consumer defensive industry, Canada’s Dollarama (OTCMKTS:DLMAF) is essentially our northern neighbor’s equivalent of Dollar Tree (NASDAQ:DLTR) or Dollar General (NYSE:DG). It offers a variety of products, from general merchandise, consumables and seasonable products. With the North American consumer economy struggling to get back on its feet after years of pandemic-related troubles, DLMAF ranks among the most relevant international stocks.

Not surprisingly, the company has held its own in terms of financial expectations last fiscal year. In the past four quarters, Dollarama’s average positive earnings surprise came out to 8.5%. Its strongest quarter in fiscal 2024 was the second quarter, when the company beat the consensus EPS target by 11.7%.

For the current fiscal year (2025), analysts are looking for EPS to land at 4.01 CAD, 12.6% above last year’s print of 3.56 CAD. On the top line, they’re projecting sales of 6.35 billion CAD, up 8.2% from fiscal 2024’s tally of 5.87 billion CAD. Covering experts rate DLMAF a consensus moderate buy with an $86.57 price target.

Stellantis (STLA)

Source: Jonathan Weiss / Shutterstock.com

On the surface, Netherlands-based Stellantis (NYSE:STLA) might not be a name that Americans recognize off the bat. However, they would easily recognize some of its brands, which include Chrysler, Dodge and Jeep. Still, recognition alone doesn’t warrant inclusion on a list of international stocks to buy. For Stellantis specifically, its job cuts raise questions about forward viability.

Despite the challenges the automotive industry faces, Stellantis is worth putting on your radar as a cynical contrarian opportunity. Fundamentally, electric vehicle manufacturers are not getting the business done. And that’s incredibly conspicuous considering that gasoline prices are moving up. Economically, then, combustion-powered cars still have an edge, which could benefit STLA.

Another factor to consider is the deep value proposition. In terms of forward earnings, shares trade hands at a multiple of 4.72X. In terms of sales, they’re trading at 0.42X. Both metrics are modest relative to the underlying auto industry.

At the same time, analysts are pegging shares a consensus moderate buy with a $30.53 average price target. Further, the high-side estimate lands at $43.11, implying almost 60% upside potential.

Baidu (BIDU)

Source: monticello / Shutterstock.com

At a cursory glance, you’d think that China-based Baidu (NASDAQ:BIDU) would be killing it in the market. Operating under the communication services sphere, Baidu focuses on internet content and information. It’s best known for providing Internet search services in China. It has also heavily invested in artificial intelligence, with its AI unit generating revenue of $91.2 million in Q4. That appears to only be the beginning.

However, investors aren’t really digging the idea. Since the January opener, BIDU stock slipped more than 11%. In the trailing 52 weeks, it’s down 25%. That’s quite the opposite fate for many companies who have pushed their AI relevancies. Still, the data doesn’t seem to jive with the poor performance.

Let’s look at the hard numbers. In the last fiscal year, Baidu’s average positive earnings surprise clocked in at nearly 27%. Its best performance was in Q2, when EPS of $3.08 bested the consensus view of $2.31. On the other hand, the “worst” performance was Q4, when EPS of $3.03 was above the consensus target of $2.47.

For the current fiscal year, analysts are looking for revenue to reach $19.97 billion, up 7.3% from last year’s print of $18.61 billion. It’s one of the underappreciated international stocks to watch.

On the date of publication, Josh Enomoto 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.

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. Tweet him at @EnomotoMedia.

Articles You May Like

3 Social Media Stocks to Buy Now: May 2024
Go Gaga for GOOG? 3 Things That Make Alphabet Stock a Solid Long-Term Buy. 
3 Chinese Stocks to Buy Now: May 2024
3 Tech Stocks to Sell Before These Titans Topple
3 Sorry Semiconductor Stocks to Sell in May While You Still Can