The United States is home to many of the world's largest and most critical companies. While an investment emphasis on these U.S. companies' stocks can bring plenty of opportunities, an American focus may also lead one to miss potentially profitable opportunities from some great non-U.S. companies.
Fortunately, many of the more prominent international stocks trade on U.S. exchanges, and investors looking for such stocks can look to companies such as ASML Holdings (ASML -1.03%), MercadoLibre (MELI -1.79%), and Shopify (SHOP -2.37%). Let's find out a bit more about these three great foreign companies to invest in right now.
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1. ASML
ASML is not a household name for American investors. Since its only real customers are semiconductor producers, it tends not to attract much attention from average investors.
However, the Netherlands-based equipment maker manufactures a critical component in the semiconductor industry. It is the world's only producer of the extreme ultraviolet lithography machines needed for foundries to produce the world's most advanced chips. Because of this advantage, the current chip shortage cannot end without ASML's help. Hence, the most critical problem facing ASML is not finding business but fulfilling the tremendous demand for its machines.
Such pricing power helped it earn 18.6 billion euros ($20.1 billion) in revenue in 2021, a 33% increase from prior-year levels. By limiting expense growth, it reported an income of 5.9 billion euros ($6.4 billion), 66% more than in 2021.
Admittedly, that growth may slow as analysts forecast a 14% increase in revenue in 2022. That reality may have contributed to the 6% drop in ASML stock over the last 12 months.
However, its price-to-earnings (P/E) ratio is 35, its lowest level since early 2020. Moreover, the rising demand that drives the chip shortage should indicate that ASML's stock will likely not suffer for long.
2. MercadoLibre
Argentina-based MercadoLibre is the pioneer of Latin American e-commerce and fintech. It introduced e-commerce to its region, and it spawned new businesses by addressing challenges unique to Latin America.
The consumers in the regions it serves tend to be heavily unbanked and primarily use cash. Hence, it created Mercado Pago to enable more purchases for its e-commerce business. The company later leveraged Mercado Pago to launch a fintech business serving other businesses and consumers. Consequently, the number of payment transactions continues to register considerable growth.
Also, shippers face unique challenges in many parts of the region. To combat this, it created Mercado Envios. This segment can fulfill and ship orders for both itself and outside clients.
Through these businesses, MercadoLibre generated nearly $7.1 billion in revenue in 2021, a 61% increase from prior-year levels. It also began reporting an annual profit with earnings of $83 million in 2021. Analysts forecast a 38% revenue increase in 2022, meaning growth should remain robust despite a slower pace.
Additionally, new investors can buy at a discount as the stock has fallen by about 30% over the last year. With its price-to-sales (P/S) ratio of 8, which is nearly a six-year low, it could turn into a top growth stock to buy right now.
3. Shopify
Given its extensive presence in the U.S., some investors may have assumed that Shopify is an American company. However, it has rapidly expanded its customer base and offerings from its base in Ottawa.
It has competed in a crowded field of platform providers such as Wix, Squarespace, and the popular WordPress app WooCommerce. Despite that competition, Shopify won over many customers with its ease of use, low cost, and fast service.
Nonetheless, it may have solidified its competitive advantage by moving beyond software to launch the Shopify Fulfillment Network (SFN). It has built fulfillment centers in the U.S. and its native Canada that can process, package, and ship orders. The SFN also helps Shopify stock because its mere existence forces many sellers of goods to choose Shopify over the software vendors it competes with.
This approach brought in more than $4.6 billion in revenue in 2021, 57% higher than 2020 levels. Still, operating expenses such as research and development also surged, and Shopify avoided a decline in profits due to nearly $2.9 billion from unrealized gains in equity and other investments. That may have played a role in Shopify stock losing about half of its value over the last year.
Still, the higher spending on research and development should lead to rising profits later. Also, the P/E ratio of 26 is at a multi-year low, and given the growth of e-commerce and its competitive advantage in this space, investors may want to take advantage of the discounted stock price.
