American investors might own more domestic stocks than foreign stocks, for two simple reasons: It's easier to understand American companies if you've used their products or services before, and it can be easier to buy American stocks than foreign stocks.
However, investors who only buy American stocks could be missing out on big growth opportunities in other countries. I previously highlighted Sony, LVMH, Nestle, and Tencent as easy ways to diversify your portfolio beyond the U.S.
Today, I'll add three more international stocks to that list -- Shopify (SHOP 1.61%), BlackBerry (BB +2.65%), and Sea Limited (SE +0.53%) -- and explain why many Americans could use their products soon.
Image source: Getty Images.
1. Shopify
Shopify, Canada's most valuable company, is one of the few e-commerce companies Amazon just can't seem to beat. Unlike Amazon, which herds third-party merchants into a crowded marketplace filled with its own first-party goods, Shopify helps businesses build their own online presences with tools for creating e-commerce sites, launching marketing campaigns, processing payments, and fulfilling orders.
Shopify serves over a million businesses worldwide, and its decentralized approach continues to attract new clients. It mainly serves smaller businesses, but it's also helping established brands like Kraft Heinz quickly set up direct-to-consumer channels.
Shopify's revenue soared 86% to $2.93 billion in fiscal 2020, while its gross merchandise volume (GMV), or the value of all goods sold on its platform, jumped 96% to $119.6 billion. Its adjusted net income also increased 14 times year over year to $491 million.
Shopify's growth could decelerate after the pandemic ends, but I believe American businesses and consumers will keep using this Canadian tech giant's e-commerce services for the foreseeable future.
2. BlackBerry
BlackBerry, which was Canada's tech darling before Shopify stole the spotlight, was once synonymous with smartphones. That heyday ended after iPhones and Android devices carved up the market, and BlackBerry has turned itself into a software company over the past several years.
That's why it might seem odd for me to include BlackBerry in this list. But I'm not referring to its namesake phones, which have been produced by third-party manufacturers since 2016. I'm talking about QNX, the embedded operating system it acquired in 2010.
Image source: Getty Images.
If you've driven a car with an in-dash infotainment and navigation system, you've likely used QNX. QNX accounts for over half of the embedded OS market for connected vehicles.
Its closest competitor, Microsoft's Windows Embedded, only controls about a quarter of the market. Between 2015 and 2019, QNX's installed base tripled from 50 million vehicles to over 150 million vehicles.
Newer in-car services, like Apple's CarPlay and Alphabet's Android Auto, run on top of QNX. BlackBerry is also developing a new QNX-powered automotive platform, IVY, with Amazon Web Services.
QNX is a core component of BlackBerry's IoT (Internet of Things) portfolio, which includes its communications services AtHoc and SecuSuite and generates about a third of its revenue. This business suffered a slowdown last year due to pandemic-related disruptions across the auto sector, but it could eventually become a major growth engine again.
3. Sea Limited
Sea Limited probably isn't a familiar name for most U.S. investors. But the e-commerce and video game company, which overtook DBS Group as Singapore's most valuable company last year, could bring its blockbuster battle royale game Free Fire to the U.S. soon.
Sea owns two core businesses: Shopee, the largest e-commerce platform in Southeast Asia and Taiwan; and Garena, a mobile game publisher that mainly licenses third-party games. Garena is profitable on an adjusted EBITDA basis, but Shopee isn't.
In late 2017, Garena launched Free Fire, its first game developed in-house. It subsequently became the highest-grossing mobile game in Southeast Asia and Latin America, and the most downloaded mobile game in the world last year. That growth enabled Sea to offset Shopee's losses with Garena's profits.
Sea's revenue more than doubled to $4.4 billion in 2020, and it generated an adjusted EBITDA of $107 million, compared to a loss in 2019. But like Shopify, Sea's growth is expected to decelerate after the pandemic ends. To offset that slowdown, Sea will need to extend Free Fire's lifespan with new versions, like the graphically enhanced Free Fire MAX, and expansions into other markets.
During last quarter's conference call, CEO Forrest Li declared Sea would turn Free Fire into a "long-lasting global franchise" by expanding into new markets and hosting new esports tournaments. One of those target markets will likely be the U.S. -- and I wouldn't be surprised if Free Fire gains ground against aging battle royale games like PUBG and Fortnite.
