International outlook: Think all the best stocks are in the U.S.? Think again.

Based on an international outlook, a question arises, and do you think that all the best stocks are in the United States? If so, you should reconsider and take another look.

While it is true that international stocks have generally lagged behind in the U.S. markets in the last 10 years, returns based on indices that most investors follow do not tell the whole story. In one company by company, the image is significantly different.

It is important to emphasize the fact that since 2009, the top 50 companies with the best annual returns each year were overwhelmingly located outside the United States. In many of those years, 80% to 90% had a non-US address. UU. In this way, it could be said that that means that if I had decided to ignore European, Asian and other non-American actions, an opportunity would have been lost in many of the best opportunities.

Potentially attractive features

For long-term investors focused on the selection of individual securities, international markets present a fertile hunting ground.

And it is important to mention that in addition to diversification, non-US stocks offer a number of other potentially attractive features, which include higher dividend yields, the possibility of benefiting from the currency’s tailwinds if a strong US dollar begins to weaken and, perhaps the most compelling attribute, substantially lower valuations.

Thus, international markets generally have a greater concentration of value-oriented actions in the sectors of the “old economy”, such as financial and basic materials. Basic consumption actions are also important components in the European indexes. If you compare that with the United States, where consumer technology and technology companies dominate the Standard & Poor’s 500 composite indexes. That only explains much of the decade-long return gap between US and non-US stocks.

Likewise, among comparable companies, the valuation gap is especially pronounced when observing multinationals in the United States against Europe. In many cases, companies with similar perspectives operate with significant discounts, partly because they have a European address.

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Source: Capital Group