DFAI - 3 Global Stocks Worth Buying as America Stumbles
2024-07-12 07:07:00 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
MoneyWeek columnist Bill Bonner wrote in the June 28 edition of the U.K. financial publication that the two men running for president of the United States are perfect candidates for a nation in decline. That got me thinking about global stocks.
Now, don’t get me wrong, I continue to believe the U.S. is one of the best stock markets you can own for the long haul anywhere on this planet. That’s because the U.S. accounts for approximately 43% of the global stock market by capitalization.
Of course, were the U.S. in actual decline, that percentage would drop over the next few years. But for now, the U.S. market cap is nearly 4x the total for the entire European Union. The second-largest country by market cap is China.
But, let’s assume for a second that the U.S. is in decline, it would make sense to move some of your investments out of America.
To find three global stocks worth buying as the U.S. stumbles, I will choose a small-cap, mid-cap and large-cap stock from three international ETFs.
Here are my choices.
Novo Nordisk (NVO)
First up is Novo Nordisk (NYSE: NVO ), the Danish pharmaceutical company whose weight-loss drug, Wegovy, and diabetes drug, Ozempic, have delivered massive profits and shareholder gains over the past year.
Up 40% year-to-date and 86% over the past year, NVO is the top holding of the Dimensional International Core Equity Market ETF (NYSEARCA: DFAI ) with a 1.8% weighting.
In June, the company announced it would spend $4.1 billion to double the size of its North Carolina manufacturing facility to 2.8 million square feet, with most of the production in the new section to begin by 2027 and be at full capacity by 2029.
Competition for GLP-1s (Glucagon-like peptide-1) is intense. In 2024, the market for these drugs is estimated to be $42 billion. By 2030, they’re expected to reach $130 billion.
Due to the two drugs’ success, Novo Nordisk is one of the largest companies by market cap in Europe.
However, it’s important to understand that the company’s stock trades at 17.7x sales, more than double what it was in 2019. You’ll have to manage your expectations for the stock’s appreciation in the months ahead.
TGS ( TGSGY )
Next up is TGS (OTCMKTS: TGSGY ), the second-largest holding in the Invesco FTSE RAFI Developed Markets ex-U.S. Small-Mid ETF (NYSEARCA: PDN ) at 0.25%. The ETF tracks the performance of the FTSE RAFI Developed ex U.S. Mid Small 1500 Index , a collection of stocks selected based on their fundamentals for sales, cash flow, book value and dividends over the prior five years.
Based in Norway, the company is the world’s leading energy data company. With its main offices in Oslo and Houston, it provides energy companies with digital tools to use advanced analytics and AI to understand data for seismic, wells, carbon capture, wind and solar energy.
On July 1, it completed its $862 million all-stock acquisition of PGS, its Norwegian competitor. The combined entity will have an enterprise value of $2.6 billion, with TGS shareholders owning two-thirds and PGS owning the rest.
In 2024’s second quarter, its revenues were $224 million, up from $206 million in Q2 2023. PGS revenues for the quarter are expected to be approximately $180 million. However, PGS won’t be integrated into the financials until Q3 2024.
The company believes it is heading into a multi-year upcycle with its energy customers looking to increase their exploration endeavors.
TGS has a market cap of 25.18 billion Norwegian krone ($2.35 billion, based on current exchange rates), putting it right in the middle of small and mid-cap stocks.
Iveco Group (IVCGF)
Iveco Group (OTCMKTS: IVCGF ) is the fifth-largest holding of the Avantis International Small Cap Value ETF (NYSEARCA: AVDV ) at 0.85%. Based in Turin, Italy, IVCGF has a market cap of $2.94 billion.
Iveco manufactures trucks, commercial vehicles, buses and specialty vehicles for firefighting, defense and other applications. It has eight brands, including Iveco, FPT Industrial, Iveco Bus, Heuliez, IDV, Astra and several others.
Iveco was created in 1975 through the merger of five truck brands within the Fiat Group: Fiat, OM and Lancia of Italy, Unic of France and Magirus Deutz of Germany.
In May, the company reported its Q1 2024 results. On the top line, its sales were 3.4 billion euros, flat year-over-year, while its adjusted EBIT (earnings before interest and taxes) was 233 million euros, 34% higher than Q1 2023.
In January, IVECO Bus won a contract to deliver 411 battery electric buses to ATAC , Rome’s public transport company. It is the company’s largest electric bus contract in Italy. In March, the company expanded its reporting segments from three to five: Truck, Bus, Defense, Powertrain and Financial Services.
If you want a more Buffett-esque way to own Iveco, Exor (OTCMKTS: EXXRF ), the holding company of Italy’s Agnelli family, owns 27.1% of the company, with 42.6% of the voting rights.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
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