3 Cheap International Stocks to Buy
These stocks have economic moats and look attractive today.
Susan Dziubinski: Hi, I’m Susan Dziubinski, co-host of The Morning Filter podcast. On a recent episode, special guest and Morningstar Europe Market Strategist Michael Field discussed international investing today and shared three undervalued stocks he likes: Rheinmetall RNMBY, RELX RELX, and National Grid NGG.
Today, we’re taking a look at three more international stocks that look undervalued today.
3 Cheap International Stocks to Buy
The first cheap international stock we like is Fresenius Medical Care. Fresenius is the largest dialysis service provider and equipment maker in the world. We think the company has carved out a narrow economic moat underpinned by intangible assets and efficient scale. Fresenius has been pursuing a restructuring program that should allow it to maintain its narrow moat and improve margins. We’re forecasting 3% revenue growth and 9% adjusted earnings per share growth compounded annually through 2030. Fresenius’ ADRs trade well below our $38 fair value estimate.
Read Morningstar’s full report on Fresenius Medical Care.
The next undervalued international stock to buy is Sony Group. Sony is a technology conglomerate. Now, the company’s roots are in its consumer electronics business, but it also has music and movie businesses, as well as a sizable image sensor business and, of course, its gaming PlayStation business. We think the company as a whole has carved out a wide economic moat. Most notably, the game and network services group’s wide moat stems from intangible assets, switching costs, and the network effect, while its wide-moat music business benefits from intangible assets. We think its other numerous businesses have built narrow moats. And we think concerns that artificial intelligence will impact Sony’s content businesses are overdone. Sony’s ADRs look significantly undervalued relative to our $34 fair value estimate.
Read Morningstar’s full report on Sony Group.
The final undervalued international stock is Reckitt Benckiser. Reckitt’s portfolio that includes familiar global brands like Lysol, Finish, Durex, and Mucinex, among others, is well positioned in categories that benefit from secular growth drivers. And Reckitt’s brands command premium prices. We assign the company a wide economic moat based on intangible assets that reflect the strength of its brands and its entrenchment in retail supply chains. We forecast a compound annual growth rate in organic sales of about 4% over the next five years. We think Reckitt’s ADRs are worth $18.60, and they trade well below that.
Read Morningstar’s full report on Reckitt Benckiser.
For more stock ideas, be sure to tune in to The Morning Filter each week wherever you get your podcasts, and visit Morningstar.com, too.
Morningstar director Kazunori Ito, senior analyst Julie Utterback, and analyst Diana Radu provided the research behind this segment.
Watch 3 Stocks We’d Still Buy After Earnings for more from Susan Dziubinski.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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