A 2017 study found that Americans were among the people least likely to travel beyond their own country’s borders. This could be due to lack of interest, the long distances involved in crossing oceans, or a number of other reasons. But that certainly doesn’t prevent what is produced by international companies from coming to the United States.
Many Americans probably use these products and services without even realizing where they came from. But it’s staying under the radar and making other brands succeed that has helped Diageo (NYSE: DEO), Shopify (NYSE: SHOP), and ASML Holding (NASDAQ: ASML) all of them become respected companies (at least by investors).
These three companies may not get much public attention, but are they big investments today? Let’s explore a little more and try to find the answer.
The UK-based spirits producer has a large portfolio of beverage brands including Guinness, Johnnie Walker and Smirnoff, and those names are much better known than the company that produces them. Yet having a plethora of popular liquor brands can only help a business so much when the restaurants and bars that sell them are either closed or operating at reduced capacity. Diageo sales were down 8.7% year-over-year to 11.75 billion pounds (about $ 14.6 billion) for the fiscal year ended June 30. The company has forecasted a decline in year-over-year revenue for the first half of its 2021 fiscal year (July to December) but is seeing a recovery in sales, particularly at the US competitor. Brown-Forman (NYSE: BF.A)(NYSE: BF.B) continued the trend, reporting 9% year-on-year sales growth over the May-October period, driven by strong demand for Jack Daniels in the United States. exactly where it started 2020.
The company may have weathered the pandemic, but longer-term headwinds could prove more difficult. The percentage of college-aged Americans who reported abstaining from alcohol rose from 20% in 2002 to 28% in 2018. Trends are similar in the UK Of course, every generation has its vice, and one study of Americans between the ages of 30 and 80 found that they drank 14% more often during the pandemic.
Also of note: Now that 15 states and the District of Columbia have legalized recreational marijuana, the demand for alcoholic beverages may decline further. A 2017 county-level study found that following the legalization of medical cannabis in a local, alcohol sales were reduced by 12% on average.
With dozens of brands, Diageo will be in a good position to take advantage of any drinking trends that emerge after the pandemic as consumer tastes invariably change, but it is a slow growing company. With the stock currently trading at 31.5 times its pre-pandemic annual profit – 30% higher than its five-year average – investors may be better served to wait for a more opportune time to buy Diageo stock .
This rapidly growing Canadian software-as-a-service player provides merchants with an easy-to-use platform for launching and operating online storefronts. It offers a range of integrated tools for e-commerce, marketing, payment management and order fulfillment. In a virtual presentation in December, management described what they do as “an arm[ing] the rebels. ”Unlike Amazon, which trivializes its merchants in a list under a search box, Shopify has set up an ecosystem that facilitates commerce without interfering between businesses and their customers. As a result, most customers will have no idea if an ecommerce site they are visiting is a Shopify customer.
When physical businesses found themselves forced to quickly go online to survive during the pandemic, many turned to Shopify to help them. Its revenue for the third quarter increased 96% year-over-year to $ 767.4 million. Likewise, the gross value of the goods – the value of all sales on the platform – increased by 109%. These aren’t the only numbers that indicate the platform is adding value to business owners. Merchants continued to embrace the company’s offerings – like cash advances and loans from Shopify Capital, logistics from Shopify Shipping, and the payment experience or installment plans from Shopify Pay – at a higher rate. in the third trimester. Additionally, the number of partners who made a referral increased 63% to 37,400 in the 12-month period ending September 30.
The stock is currently trading at a premium, so investors may want to wait for a pullback before buying stocks. Shopify stock is currently trading at 56 times sales, which is near its highest valuation on record – and twice Amazon’s peak during the dot-com bubble.
3. Holding ASML
This Dutch manufacturer of lithography systems used to create microchips is called “the most important tech company you’ve never heard of”. It’s hard to argue with that. Almost all devices with a chip are based on ASML technology. Its machines use light to print patterns on silicon wafers, but that doesn’t begin to describe the complexity of the company’s latest extreme ultraviolet (EUV) lithography machines. These use droplets of molten tin, vaporized by plasma lasers, emitting radiation that bounces off mirrors so smooth that if they were the size of Montana, no bump on them would exceed 1 millimeter in height.
These chip-making machines, which are the size of a double-decker bus, cost around $ 120 million apiece. And they’re out of stock for two years.
ASML has around 62% of the lithography market, but it is the only manufacturer of advanced EUV machines. Originally, EUV lithography technology was supposed to be commercially deployed in 2007, but it wasn’t until 2018 that the first customer used it. Now that it’s here, ASML’s sales are taking off. In the last four published quarters, the company’s revenue increased 26% year-on-year to 13.76 billion euros, and net profit increased 49% to 3.34 billion euros. ‘euros. The company will have to continue growing at a similar pace if its stocks are to outperform from here. Based on the 9.55 euros per share that analysts estimate it will earn next year, its forward P / E ratio will be 20% above its five-year average. ASML is the kind of stock investors can safely buy during a downturn, but it will take one to bring stocks back to their historic valuations.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.