It's a great big world out there, and some of the best investments can be found outside America's borders. Domestic investors have a harder time accessing some foreign stocks because U.S. brokerages only offer American Depositary Receipts (ADRs) or unsponsored over-the-counter tickers for them. Others make it easy to invest since their shares are listed directly on one of the major American markets.
The foreign tech stocks below are easy to research and buy because you're probably already familiar with their products and their stocks are listed directly on American exchanges. Here's why you should take a closer look at Dutch microchip-maker NXP Semiconductors (NXPI +3.81%) and Swedish music-and-podcasts streamer Spotify (SPOT +0.38%).
Image source: Getty Images.
NXP is on a roll
As a worldwide market leader in the field of automotive computing, NXP enjoys massive demand for its products. Automakers around the world are putting more and more microchips into their newest models, controlling everything from infotainment systems and heads-up displays to fuel injection and automatic transmissions.
Surging interest in self-driving vehicles only throws more fuel on NXP's fires. The supply-and-demand balance is so lopsided that the largest third-party chip manufacturer has promised to prioritize automotive computing over other clients until further notice.
In other words, NXP's business is booming. Sales rose 9% year over year in the fourth quarter of 2020, and operating cash flows increased by 26%. Don't forget that NXP backs up its automotive computing muscle with promising growth markets such as industrial computing, data security, and the Internet of Things.
Analysts and investors alike are embracing NXP's powerful growth, pushing the stock price 64% higher since the start of 2020. NXP is setting fresh all-time highs nearly every day, and I expect the positive trend to continue for many years. That's why NXP looks like a no-brainer buy, even at these lofty share prices.
Image source: Getty Images.
Spotify is a bargain
Music-streaming expert Spotify is another high-growth phenomenon, but there's a slight hitch in the Swedish company's giddy-up. The stock is trading 89% higher since the start of 2020, but also 27% below February's all-time highs. The recent plunge was triggered by Spotify's fourth-quarter report, which beat Wall Street's expectations in many ways but was paired with conservative guidance for 2021.
Some investors cashed in their recent Spotify winnings at that point, spooked by modest revenue guidance in the middle of a market-wide retreat from high-octane growth stocks. That's a big mistake, and risk-tolerant investors should see this dip as an invitation to pick up some Spotify shares on the cheap.
The company is making smart investments in premium podcast content. Subscription prices will rise in a few markets later this year, and the top-line boosts won't scare off millions of Spotify subscribers. The service is generally seen as a great entertainment value, giving management plenty of room to grow margins and revenue streams through a slow-and-steady series of careful price increases.
We have seen this movie before. Netflix is a master of the price-boosting art form, and Spotify can confidently follow in the video-streaming veteran's footsteps. Need I remind you that Netflix investors have enjoyed a market-crushing 428% return over the last five years? Spotify could most certainly pick worse role models to follow.
When it comes to the modest sales guidance that started February's plunge, remember that Spotify has a long history of setting low guidance targets and then delivering actual results at or above the top end of the official guidance range. Call me biased, but I think these Swedes know what they're doing. This stock belongs in growth-oriented stock portfolios.
