Rosalind Evans
Don’t overlook lucrative investments just because they’re based outside the U.S. While America remains a focal point for innovation and its markets are closely monitored globally, this focus often keeps investors from exploring international options.
Ignoring global markets, however, can mean bypassing some promising opportunities. Many overseas companies are experiencing rapid growth in emerging sectors, often with their shares trading at a discount.
For investors keen on diversifying their portfolios, stocks like Nu Holdings, StoneCo, and Sea Limited stand out. Here’s why these three companies make compelling investment cases:
1. Nu Holdings
Ranked as the world’s largest digital bank by TopMobileBanks, Nu Holdings, based in Brazil, has successfully integrated millions of previously unbanked Brazilians into the financial mainstream. Within just one year, they issued first-time credit cards to nearly 6 million Brazilians.
Already a fixture in the financial life of almost half of Brazil’s adults, Nu is replicating its business model in Mexico and Colombia. This strategy has swelled its customer base to 84 million, marking a 28% year-over-year increase.
Warren Buffett’s Berkshire Hathaway saw the potential early on, becoming an initial investor. The company’s robust growth—$3.5 billion in revenue for the first half of 2023, a 71% increase compared to last year—is another positive sign. The operational efficiency has also led to a net income of $367 million for the first half of this year. After a slump earlier in the year, Nu’s stock has rebounded, offering an attractive forward P/E ratio of 38.
2. StoneCo
Another Brazilian gem, StoneCo, attracted pre-IPO investment from Berkshire Hathaway. Serving businesses in Brazil, its fintech services are comparable to those of Block’s Square ecosystem.
The company faced a downturn in 2021, with its stock value plummeting due to high inflation, loan defaults, and pandemic-related restrictions. Nevertheless, StoneCo has bounced back, reporting 5.7 billion reais ($1.2 billion) in revenue for the first half of 2023—an increase of 30% from last year. With restrained operational expenses, the company turned a net profit of 533 million reais ($110 million).
Despite its recovery, StoneCo’s stock has stagnated this year, which makes its forward P/E ratio of 15 appealing, especially considering the company’s projected 23% revenue growth for the next quarter.
3. Sea Limited
Headquartered in Singapore, Sea Limited has also seen its stock price plummet by over 90% from its all-time highs. Declines in its gaming and e-commerce segments precipitated this fall.
However, its fintech arm, SeaMoney, has continued to expand, and its e-commerce platform, Shopee, has rebounded in most markets outside of Southeast Asia. Although its gaming segment, Garena, saw a 47% decline in revenue for the first half of 2023, the company posted a modest 5% increase in revenue to $6.1 billion.
Recently, the company became profitable, reporting $418 million in net income for the first half of 2023. It also received a boost when it got clearance to relaunch operations in India, which could help reverse revenue declines.
Sea Limited’s stock is trading near its 52-week lows, yet it has a forward P/E ratio 18. If Garena starts to recover, this could be a turning point for the company’s stock.
Nu Holdings, StoneCo, and Sea Limited offer promising avenues for investors looking to broaden their horizons beyond the U.S. market.
In an increasingly interconnected global economy, savvy investors would do well to expand their scope beyond domestic borders. Companies like Nu Holdings, StoneCo, and Sea Limited exemplify the untapped potential in international markets. These firms have strong growth trajectories and trade at valuations that make them particularly attractive. By diversifying your portfolio with such global heavyweights, you’re not just spreading risk but also capturing opportunity.
