3 great foreign companies to invest in right now

Not all stocks traded on US exchanges are actually US companies. In fact, some of the most successful stocks in the market are foreign, but they see the US as a place to raise funds and gain exposure to another class of investors.

If you are looking for foreign companies to own, Spotify (POINT 1.14%), Free market (MELI -0.81%)and Taiwan Semiconductor (TSM 1.07%) stand a little above the rest.

1. Spotify

You probably know Spotify as a music streaming company, but it’s becoming much more than that. It has invested heavily in podcasts over the past five years and has now added audiobook time to premium subscriptions. Spotify is the business that wants to “own your ears” and that sets it apart from competitors like An apple and YouTube, which have a bigger business outside of music.

The user base is growing rapidly, with premium subscribers up 16% in Q3 2023 to 226 million and ad-supported subscribers up 32% to 361 million. And this forms the basis for both a growing premium business and an attractive advertising business, where Spotify’s advantage lies.

There aren’t many companies that can go head-to-head with Apple and come out on top, but Spotify has done so in both music and podcasts. And recent spending cuts could help prompt financial improvement in 2024.

2. MercadoLibre

Latin America is adopting both e-commerce and fintech products at a rapid pace, and MercadoLibre is leading the way in both. Over the past five years, the company has grown its revenue by 730% and has gone from broke to highly profitable in just the past two years.

MELI Revenue (TTM) data from YCharts

Like Amazon in the US, MercadoLibre has a big infrastructure lead over e-commerce rivals, and its fintech products are both integrated with its e-commerce platform and built into other sellers.

The stock is expensive, with an enterprise value of nearly 5 times sales and a price-to-earnings ratio of 49 times, but the growth and profitability are too good to ignore, and it’s one of the best ways to go long growth in Latin America. term.

3. Taiwan Semiconductor

Semiconductors have become critical to the world and Taiwan Semiconductor is perhaps the largest importer and manufacturer. It makes AI chips for NVIDIA and the chips in iPhones and Macs—even Intel buys chips from Taiwan Semiconductor.

The beauty of Taiwan Semiconductor’s business model is that it is a manufacturer that is not vertically integrated in designing and selling its own chips. It’s just a third-party manufacturing facility for other companies. This allowed TSMC to build the most advanced manufacturing facilities in the world and spread the initial costs among hundreds of customers.

It’s hard to overstate how profitable this model is, but the net income approaching 50% of revenue you see below gives an idea of ​​how well the company is doing.

TSM Earnings Chart (TTM).

TSM (TTM) earnings data from YCharts

It is one of the most important companies in the world and investors are getting reasonable value in the stock. The stock is trading at 16x earnings and we’re in a down cycle, so there’s an upside as more companies build custom chips for their tech products.

Great Foreign Companies to Buy in the USA

None of these companies are based in the US, but they used the US markets to go public, which is why you can buy shares. And with plenty of exposure to international markets, they’re great ways to get geographic diversity in your portfolio.

Suzanne Frey, CEO of Alphabet, is a member of The Motley Fool’s board of directors. Travis Hoium has positions in Alphabet, Apple, Intel, MercadoLibre and Spotify Technology. The Motley Fool has positions in and recommends Alphabet, Apple, MercadoLibre, Spotify Technology and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 Intel calls, long January 2025 $45 Intel calls and short February 2024 $47 Intel calls. The Motley Fool has a disclosure policy.

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