With domestic markets stretched, it’s time to look abroad.
Thanks to the positive sentiment surrounding the U.S. and China signing a “phase one” trade agreement, several tech stocks have skyrocketed recently. That’s not surprising considering that China is both a massive and still growing market for technological innovations. Nevertheless, investors may want to limit their exposure to the domestic space in favor of international names.
For one thing, the U.S. equity sector has broadly and consistently outperformed its global counterparts over the last several years. Of course, this is not a guarantee that foreign companies will start beating out American competitors. However, markets generally move cyclically. Purely from a probability standpoint, it might make sense to consider international tech stocks.
Furthermore, U.S. tech stocks exposed to geopolitical risks in a magnitude that you don’t usually find with international counterparts. Let’s face it: We’re the world’s sole superpower. And like it or not, it’s our duty to support the cause of freedom wherever possible. But because of this moral mandate, we are necessarily involved in controversies.
Long story short, our companies can be on the receiving end of unfavorable treatment, like in the U.S.-China trade war. However, some international tech stocks might avoid such geopolitically motivated troubles.
Finally, international tech stocks have home field advantage. Although U.S. blue chips always have their eyes set on global expansion, international organizations best understand the nuances of their market or region.
So, if you’re ready to step outside your comfort zone, here are seven international tech stocks to put on your radar.
E-commerce firm Mercadolibre (NASDAQ:MELI) is what I would call a time-capsule investment among international tech stocks to buy. Based in Argentina, Mercadolibre is actually the largest e-commerce platform in Latin America. Moreover, it leads in market share in the countries where it has a presence. In other words, MELI stock is beating out Amazon (NASDAQ:AMZN) in several emerging market nations.
Because of its similarity to our homegrown e-commerce stalwart, most folks refer to Mercadolibre as the Amazon of Latin America. Personally, I think it’s a fair comparison. However, MELI stock is a name you want to watch closely because the underlying organization is pushing beyond that title. The company sells merchandise, offers a merchant network platform, and has a payment processing service.
Best of all, e-commerce adoption in Latin America is growing rapidly. Therefore, MELI stock is a long-term investment where patience can net huge returns.
When people think about aviation tech stocks, typically Boeing (NYSE:BA) and Airbus (OTCMKTS:EADSY) come quickly to mind. However, Brazilian firm Embraer (NYSE:ERJ) should also be on your list of publicly traded firms to watch closely. Perhaps most famous for its line of gorgeous executive airplanes, ERJ stock also has exposure to the lucrative defense market.
But what makes Embraer stand out among international tech stocks is its innovative, envelope-pushing projects. Currently, the company has a partnership with Uber Technologies (NYSE:UBER) to develop aircraft for the transportation needs of tomorrow. While Uber has essentially catalyzed the ride-sharing phenomenon, it’s not done: it wants to dominate the skies as well. That’s a compelling reason to buy ERJ stock.
Want another reason? Historically, ERJ stock is undervalued. Since July of 2000, shares are actually down a bit. Basically, ERJ hasn’t moved for 20 years. But a compelling partnership with Uber might change that.
I’m not really sure if you’d call ASML (OTCMKTS:ASMLF) a household name. But within the arena of international tech stocks, ASML is a true powerhouse. Headquartered in Veldhoven, Netherlands, the semiconductor firm has multiple corporate clients throughout the world. Chances are, if you used any modern digital device, you’ve used ASML products. Due to the organization’s importance to the sector, having some exposure to ASMLF stock is likely a wise bet.
A key driver for ASML is its innovations in lithography. This term describes “printing” unique patterns on silicon wafers via an advanced projection system. Furthermore, ASML is the world’s sole tech firm that utilizes extreme ultraviolet light. Essentially, the company’s next-generation technology allows it to imbue semiconductors with ever-increasing data capacities. And with multiple tech industries ranging from PCs to mobile devices clamoring for higher capacities, ASML stock is indefinitely relevant.
Launched in the over-the-counter exchange early October of last year, Adyen (OTCMKTS:ADYEY) is by default one of the riskiest international tech stocks. Therefore, I’ll warn you upfront and early that ADYEY stock is not for the faint of heart. Indeed, the disappointing environment surrounding much-hyped international public offerings should give you some pause.
At the same time, ADYEY stock is undeniably compelling. Adyen started life as an idea to bring payments transactions for businesses under one cohesive umbrella. Given that Adyen is headquartered in the heart of western Europe, I can see why the founders got this concept.
Later, the company evolved into an e-commerce, business solutions and data analytics platform. Basically, it’s the European version of Square (NYSE:SQ). Now, I like Square’s growth prospects in the U.S. and certain international markets. But Adyen may offer an understanding of the European business environment that gives it a distinct advantage. Therefore, a speculative but measured shot on ADYEY stock isn’t a bad idea.
Almost always, one of the justifications for buying China-based publicly traded companies is the underlying country’s population size. At roughly 1.4 billion, China technically has the world’s biggest addressable market for everything. But in my opinion, only few companies like Momo (NASDAQ:MOMO) can use this population statistic to its benefit.
Momo is a video and social networking app. That said, investors know MOMO stock as the Tinder of China. Most people use Tinder as a dating service, and so it is with Momo despite it being a more broad-usage social app.
Now, you understand why I think population size matters for MOMO stock. Demographically, the underlying company has hit a home run: approximately 80% of the app’s users are between 19 to 32 years old. Many of these individuals will be interested in using its services to socialize and set up dates.
In many ways, Sony (NYSE:SNE) was the dominant consumer electronics player before Apple (NASDAQ:AAPL) ruined everything. First, Apple’s iPod obliterated Sony’s iconic Walkman, which by then turned into a physically hulking device. Later, the iPhone and iPad separated the two companies by several lightyears, leaving SNE stock as a sad shell of its former self.
However, one look at the technical charts will confirm that Sony has found its way. In my view, one of the most compelling drivers for SNE stock is the Japanese tech firm’s sensor technology. Featured in multiple smartphone brands, including the current-generation iPhone, Sony has impressed millions of mobile users across the globe. And it’s set to do it again with even bigger, more powerful sensors for Apple’s future iPhone 12.
Lastly, you should consider SNE stock among your international tech stocks to buy for Sony’s unfailing PlayStation business unit. Yes, over the last several years, the Japanese icon attracted much scorn. However, its PlayStation unit is a different animal. And with the PS5 console coming out later this year, SNE is a strong opportunity.
Jumia Technologies (JMIA)
At the top of this list of international tech stocks to buy, I mentioned Mercadolibre, the Amazon of Latin America. I’m going to take it full circle with Jumia Technologies (NYSE:JMIA), which many people regard as the Amazon of Africa.
Similar to Mercadolibre, JMIA stock has an extraordinarily fascinating broad-view narrative. Indeed, the African continent may represent the most compelling narrative. According to data compiled by Quartz Africa, the continent’s “consumer e-commerce market, valued at $5.7 billion in 2017, is less than 0.5% of the continent’s GDP, far below the global average of 4%.”
If you want to talk about an addressable market, Jumia Technologies has ridiculous upside potential. But will this translate to strong returns for JMIA stock?
It might due to many efforts to bring African populations into the financial system. If and when they become banked, their access to e-commerce platforms will logically increase.
However, the African market is largely a frontier one. Thus, a short-seller made sharp, though unverified accusations of fraud against JMIA stock. One thing is for sure: If you’re going to gamble here, do so carefully.
As of this writing, Josh Enomoto is long SNE.