In any long-term diversified portfolio, international stocks not only have a place, they should be represented by as much as 10% to 15% of your investment.
The reason is not merely diversification, but because international stocks do not always correlate directly to the performance of the U.S. market. You want to have stocks that aren’t correlated to smooth out volatility.
Investors can be afraid of international stocks, as if they aren’t as safe from a political, reporting or regulatory perspective as they are here in the United States. Political risk can be very real with international stocks, and significant cultural differences can present an additional risk when trying to evaluate securities.
Look, I would be very cautious investing in China, Russia or Africa. As I’ve mentioned in many articles about Chinese stocks, China is opaque. And current headline risks can give investors pause.
Still, international exposure is necessary, and there are many international companies that you will find palatable because you know their products, and you know their name. Plus, they pay pretty good dividends to boot.
Top 10 Energy Stocks To Own For 2019: Sprouts Farmers Market, Inc.(SFM)
Sprouts specializes in selling natural, organic food and other healthy, specialized food products i.e. vegan and gluten-free offerings, at lower price points than Amazon’s (NASDAQ:AMZN) Whole Foods supermarket. Sprout’s revenue has grown significantly in recent years, and it definitely has many enthusiastic admirers. Moreover, as more people increase their focus on eating healthier food and losing weight, Sprouts’ growth should accelerate going forward.
Despite worries that price cuts at Whole Foods would make its offerings cheaper than those of Sprouts, the latter company’s products are still significantly less costly.
Sprouts is profitable, as it reported first quarter earnings per share of 50 cents for the first quarter and reaffirmed its fiscal 2018 EPS guidance of $1.22-$1.28. The company’s comparable sales growth came in at 2.7%, and its two year comp growth was 3.8%, suggesting that its comp sales accelerated in the first quarter of 2018 versus the first quarter of 2017.
Meanwhile, rising food costs tend to increase supermarket chains’ profits. There are indications that food inflation is accelerating. According to the USDA, at-home food costs had risen 0.4% in the first five months of 2018,versus a decline of 1.3% in all of 2016 and a loss of 0.2% in all of 2017. Meat prices rose 1.4% in May 2018 versus a 0.6% decline in all of 2017, while egg costs jumped 21.6% in May versus a 9.5% decline in all of 2017. The cost of fruits and vegetables had risen an average of 0.7% in the first five months of 2018 versus a 0.2% decline in 2017.
Importantly, the inflation of food away from home came in at 2.7% in May, up from 2.3% in all of 2017. As restaurant food becomes more expensive, people will choose to get more of their food from supermarkets and eat at home.
However it should be noted that the average increase in away from home food prices for the first five months of the year came in at 1.9%. Still, May’s jump may indicate that eating out is starting to become more expensive.
Finally, a larger supermarket chain or a slow growth food company could easily decide to buy Sprouts, as the market cap of Sprouts stock is still just around $3 billion.
Top 10 Energy Stocks To Own For 2019: Constellation Brands Inc(STZ)
Constellation Brands (NYSE:STZ) is my pick from the consumer goods sector. Down 5% YTD, STZ stock is taking a snooze in 2018 after several years of outsized growth.
Since 2011, it has had some spectacular years on the markets — up by 30% or more on five out of six occasions — suggesting what’s happening now is a severe case of reversion to the mean.
Don’t fret if you own its stock and if you don’t here’s why you might want to take a closer look at the company best known for holding the U.S. rights to Corona beer.
You see, Constellation Brands paid $245 million last October to buy 9.9% of Canopy Growth Corp (NYSE:CGC), one of Canada’s best-known and largest marijuana companies. Today, that investment is worth almost four-fold that amount.
However, that’s not the best part of its investment. No, the best part is that it’s going to make cannabis-infused drinks using Canopy Growth’s expertise. As states come online and legalize recreational marijuana use, Constellation gains a new market to sell into.
That’s a big deal. More so than the $800 million profit, it has already made on paper. If you want to bet on marijuana, this is as safe a bet as they come.