12 Foreign Stocks Woth Watching

8/7/2017


After years of weakness, foreign stocks have their mojo back.

The MSCI Europe, Australasia, Far East (EAFE) Index and the MSCI Emerging Market Index have handily outperformed the S&P 500 Index so far this year. The EAFE Index invests in large-cap foreign stocks, mostly in developed markets, while the Emerging Market Index targets large-caps in less-mature regions.

Over the last 25 years, the EAFE Index returned 159% and the Emerging Markets Index 247% in U.S.-dollar terms, well below the S&P 500’s 484% gain. But we understand why investors like to own foreign stocks, despite their underperformance over the long haul. Foreign stocks provide diversification benefits for portfolios containing mostly U.S. equities, and at times have delivered solid returns.

Historically, the Forecasts has never recommended a lot of foreign stocks, mostly because other countries’ accounting systems often don’t provide enough data points to satisfy our Quadrix stock-rating system. However, at the moment we generate scores for 721 foreign stocks, of which 230 operate in Canada and another 150 in either the U.K., Ireland, or Israel.

Our recommended lists currently feature only two foreign stocks, contract-research provider ICON ($106; ICLR) and industrial-machinery maker Ingersoll-Rand ($87; IR), both headquartered in Ireland. But we rate a few others A (above average) on our Monitored List. The table below presents 12 stocks worthy of consideration by investors who seek foreign exposure.

A dozen foreign options . . .
All 12 of the foreign stocks below earn Overall scores of at least 67, with an OK to Rank of at least 80%, meaning we have enough statistics to satisfy 80% of the Quadrix equation. We limited the list to stocks with market values above $5 billion, which tend to be somewhat more stable. The bottom table features a half-dozen large foreign stocks you’d be wiser to avoid. Stocks on our reccomended lists are presented in bold.
Market
Value
($Bil.)
---------- Quadrix Scores ----------
Company (Price; Ticker)
Momen-
tum
Value
Quality
Overall
OK To
Rank
Country
Chubb ($149; CB)
69.9
60
82
75
83
83
Switzerland
Delphi Automotive
($91; DLPH)
24.2
57
77
84
92
97
U.K.
Gildan Activewear
($30; GIL)
6.9
70
69
90
92
83
Canada
Honda Motor
($29; HMC)
51.6
63
99
60
89
82
Japan
ICON ($106; ICLR)
5.8
93
49
96
95
97
Ireland
Ingersoll-Rand
($87; IR)
22.5
43
56
78
68
97
Ireland
Jazz Pharmaceut.
($150; JAZZ)
9.2
64
74
97
92
96
Ireland
LyondellBasell
($88; LYB)
35.9
66
93
76
91
96
U.K.
Magna International
($47; MGA)
17.9
77
98
92
99
100
Canada
NetEase
($299; NTES)
40.9
90
48
100
92
93
China
Sensata Technologies
($45; ST)
7.8
49
77
84
89
94
Netherlands
TE Connectivity
($81; TEL)
28.6
67
67
77
89
99
Switzerland
… and a half-dozen stinkers
BHP Billiton
($41; BHP)
110.4
4
37
11
16
29
Australia
CNOOC ($112; CEO)
50.1
11
27
26
12
29
Hong Kong
HSBC Holdings
($50; HSBC)
205.2
27
24
17
22
40
U.K.
Imperial Brands
($43; IMBBY)
40.5
0
64
11
16
31
U.K.
LM Ericsson
($6; ERIC)
21.0
10
46
9
15
71
Sweden
Tenaris ($31; TS)
18.1
39
16
18
13
65
Luxembourg
Notes: Quadrix scores are percentile ranks, with 100 the best.

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