Best International Stocks to Buy in 2026: Are They Right for Your Portfolio?

Top international stocks to consider

Pros and cons of investing internationally

Pros

• Foreign markets present opportunities you miss if your holdings are strictly limited to U.S.-based stocks.
• International stocks allow investors to diversify and gain exposure to growth in other countries.
• While foreign companies sometimes come with added risks, international companies tend to have lower price-to-sales (P/S) and price-to-earnings (P/E) multiples relative to comparable businesses in the U.S.
• Many investors prefer to pay more for domestic stocks, and that can result in potentially explosive international stocks trading at discounted valuations.

Cons

• Business growth in international markets is generally considered less reliable than growth for U.S.-based businesses.
• International stocks tend to receive less coverage from U.S. analysts and media outlets, which can result in weaker valuation performance even when business results are strong.
• International companies can face outsized macroeconomic and geopolitical risks.
• In some cases, investing in international stocks means that investors have to embrace high levels of risk related to lower levels of financial visibility and the trustworthiness of reported results.

What risks come with investing in international markets?

Although the rewards of investing in international stocks can be high, there are some risks to consider.

• International markets often see outsized impacts when economic conditions worsen.
• Political instability and other developments in the country can devalue an investment, and the values of currencies fluctuate.
• Geopolitical dynamics can result in the withdrawal of support from institutional investors and lead to poor stock performance.
• Investors can face higher levels of risk related to visibility on business operations and the reliability of reported financial results.

Key differences between international and U.S. stocks

International companies with stocks that primarily trade on foreign exchanges may have different financial auditing, reporting, and visibility requirements compared to U.S. stocks that are subject to requirements put in place by the Securities and Exchange Commission (SEC). Because of these differences, international stocks can come with added risks that investors need to consider.

International stocks may also not trade directly on major U.S. exchanges. Instead, these stocks may be available to U.S. investors through American Depositary Receipts or traded over the counter.

For instance, many countries in Latin America have seen inflation levels even higher than in the U.S. and relatively weak economic recoveries on the heels of the coronavirus pandemic. While foreign stocks often trade at low price-to-earnings (P/E) and price-to-sales (P/S) multiples relative to comparable domestic companies, they also tend to be even more sensitive to macroeconomic shifts, and the current backdrop suggests plenty of potential for volatility.

Foreign companies are also more likely to fail to meet most U.S. investors' communications and reliability expectations. Even foreign companies approved by the SEC to list ADRs on U.S. exchanges sometimes fail to meet reporting expectations. It's vital to understand how well and by what means an international company communicates with investors.

Before investing in international stocks, consider how much risk you're comfortable with. While emerging markets grow faster, they also tend to be more volatile, so you may prefer to focus on developed economies. By establishing a clear strategy for your non-domestic portfolio, you are better positioned to endure market turbulence and pursue long-term gains.

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