3 international companies whose products you will soon be using


U.S. stocks are currently hovering near all-time highs, but investors might fear that economic aftershocks from the coronavirus pandemic, unpredictable political headwinds or high valuations could end this rally. To offset some of this risk, investors should consider owning a few foreign stocks that are not too dependent on the US economy.

Let’s take a look at three international companies that you probably already know and why they might make wise investments in a turbulent market.

1. Nestlé

The Swiss packaged food giant Nestle (OTC: NSRGY) owns more than 2,000 brands worldwide, including around 30 brands that generate more than one billion Swiss francs ($ 1.13 billion) in sales per year. Its main brands include Nespresso, Kit Kat, Gerber Baby Food, San Pellegrino Mineral Water, and Purina Pet Food.

Image source: Getty Images.

Nestlé’s organic sales grew 3.5% in 2019, while its underlying profits grew 11% in constant currency terms. Its organic sales grew another 3.5% in the first nine months of 2020, driven by strong sales in America and strong demand for its Purina pet food and health supplements around the world.

Nestlé expects organic sales to grow 3% for the full year and continue to divest weaker segments (like Nestlé Skin Health and its US ice cream business) to streamline operations . Analysts expect its total sales and profits to rise 1% and 5% respectively this year.

Nestlé isn’t much more exciting than US packaged food companies like General Mills Where Kraft Heinz, but it’s reasonably priced at 24 times forward earnings, yields a reliable 2.5% forward yield, and has always been a solid defensive stock during an economic downturn.

2. Spotify

Spotify (NYSE: SPOT), which is based in Sweden, has the world’s largest paid music streaming platform. The total number of monthly active users (MAU) increased 29% year-on-year to 320 million in the last quarter. Its paid subscribers grew 27% to 144 million, while its ad-supported MAUs grew 31% to 185 million.

A young woman listens to music on her phone.

Image source: Getty Images.

Spotify is not yet profitable, but its gross margins are stable and its free cash flow is increasing. However, high content costs, weak ad spend throughout the pandemic, and increased investment in podcasts have all squeezed its operating margins throughout 2020. On the positive side, that pressure could squeeze on its side. ‘mitigate as Spotify’s growing audience gives it more leverage in negotiations or companies buying more ads after the pandemic ends.

Spotify remains a speculative investment, and it still faces stiff competition from tech titans like Apple and Amazon. But despite the pressure, analysts expect its revenue to rise 40% this year and 22% next year.

Spotify won’t be making a profit anytime soon, but its stock looks cheap enough at five times next year’s sales. By comparison, China Tencent Music, in which Spotify has a stake, is still trading at seven times next year’s sales.

3. Sony

Sony (NYSE: SONY), one of Japan’s largest conglomerates, is often viewed as a slow-growing company. But this year, analysts expect its revenue and profits to rise 12% and 29% respectively, as three favorable winds emerge.

First, Sony says the PS5, which arrived last November, marked its “biggest console launch ever” as “unprecedented demand” outpaced supply from retailers. Robust sales of the PS5 are expected to offset slow growth in its weaker Electronic Products and Solutions (EP&S) business, which sells its consumer electronics and mobile devices, and its Pictures segment, which has been hit by postponed movies. throughout the pandemic.

Second, Sony Music, home to its music, anime and mobile games divisions, is expected to continue to grow with high streaming revenues, new anime releases, and the strength of top mobile games like Destiny / Grand Order. All three companies, like its core PlayStation gaming business, will likely benefit from ongoing home support measures.

Finally, Sony expects growth in its financial services over the next two quarters, thanks to greater profits from its investments in Sony Life and Sony Bank. In other words, Sony’s strengths should easily outweigh its weaknesses, and its stock still looks reasonably priced at 21 times earnings over time, even after its stock price has risen more than 40% in the past 12 years. month.

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.


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