How About Owning a Few Stocks Outside the US?
If the U.S. stock market falls - whether because of the impeachment battle, the trade war with China or slowing corporate profits - stocks outside the U.S. won't necessarily do better.
Then again, they may.
Diversifying your stock portfolio by putting a slice of it in companies based outside the U.S. makes sense at almost any time. In my view, that's truer now than usual.
If you agree, here are five stocks from five different countries you may want to consider.
Sony
Based in Tokyo, Japan, Sony Corp. (NYSE:SNE) is a diversified consumer electronics company. Among its lines of business are the Sony PlayStation, components for Apple's (NASDAQ:AAPL) iPhone and the movie studio Sony Pictures.
Sony and Walt Disney Co. (NYSE:DIS) have just reached an agreement to continue cooperating in producing Spider-Man movies and related merchandise. That's good news for both companies in my opinion. Sony is in the driver's seat, and grossed $1.1 billion (a record for the company) on the latest Spider-Man movie, "Far From Home."
Sony shares are reasonably priced at just under 1 times revenue and 10 times recent earnings. The company won't have a hit movie every year, but I like the fact that it has several profit engines.
Hella
From Lippstadt, Germany comes Hella GmbH & Co. (HLKHF), which makes lighting and electronic components for cars and trucks. Its revenue growth is unimpressive, but cash flow and earnings have grown nicely.
Hella's return on stockholders' equity was 22% the past four quarters, which is luminous. At 7 times earnings, the stock seems cheap to me.
Magna
In Canada, I think Magna International Inc. (NYSE:MGA) looks attractive. It is the largest maker of auto parts in North America and serves virtually every major car manufacturer worldwide.
Yes, the auto industry is heavily cyclical. And yes, quite a few economists think a recession in 2020 is likely. But companies like Magna are expanding their share of the automobile business - by enough, I think to compensate for a possibly shrinking pie.
Increasingly, companies like General Motors (NYSE:GM) and Ford (NYSE:F) are assemblers, who put together sophisticated, complete systems made by the likes of Magna. In the past five years, Magna has grown its sales at close to 14% a year and earnings at nearly 18%.
Societe Bic
In France, I like Societe Bic SA (BICEY), the maker of Bic pens, razors and lighters. These are steady businesses, and given the sharp tension in the Middle East, the potential impeachment of a U.S. president and the simmering trade dispute between the U.S. and China, a little steadiness is welcome.