First-quarter earnings season is almost behind us, with over 92% of companies reporting and earnings dipping 7.3% year over year for companies listed on the S&P 500. Portfolio diversification is a popular trend as markets remain volatile, and uncertain economic conditions in international markets weigh on indexes.
Gold and other safe havens are having a promising year thanks to the potential of interest rate hikes from the Federal Reserve and an oil supply glut that is finally starting to be alleviated.
Stocks are not a bad investment vehicle, but diversification is key to a fruitful portfolio. Foreign stocks should be a consideration for any long-term investor that wants a well-balanced portfolio heading into the latter half of the year.
Foreign stocks that deserve some consideration, include:
1. Korea Electric Power Corp. (KEP)
Based in South Korea, Korea Electric has a market cap of $33.39 billion and had an exceptional Q1. The company posted long-term growth of 25% and year over year net income growth of 76.8% in Q1.
The company’s Q4 2015 results were even more impressive, with income of KRW 1,573 billion on the year, up from 477 billion a year prior. Net income grew by 229.5% for the company year over year on the quarter. In total, 2015 net income rose 379.2% in 2015.
Falling fuel costs helped the company grow at a dramatic rate despite Q4 2015 revenue dipping 1.4% year over year. Revenue for the entire year rose by 2.8% in 2015.
Korean Electric Power will also benefit from the government’s restructuring initiatives going forward.
2. Manulife Financial Corporation (MFC)
The Canada-based company offers life insurance and is a dominant company in Canada that has rapidly expanded into the United States and Asia. Manulife has a market cap of $27.28 billion and had impressive income growth in Q1 of 14% year over year.
The company is fast growing and recently announced this week that it has tapped into Asia’s debt market to boost the company’s funding sources. The company issued S$500 million debt in Singapore with a 3.85% coupon that is due in 2026.
Announcements this morning from the company put Martin Powis and Alan Burnett into distribution roles for the company in the United Kingdom and Ireland. The news comes as the company expands in the UK and Ireland markets.
3. Companhia de Saneamento Basico do Estado de Sao Paulo (SBS)
A company that has proven to be resilient as Brazil’s economy struggles. SBS posted year over year income growth of 97.6% in Q1, with long-term growth projections of 29.67%. The company offers sewage and public water services to consumers, and is 50.3% owner by the Sao Paulo government.
Brazil’s economy dragged down the company’s stock this year, but EPS almost doubled analyst expectations of R$0.47, with R$0.92 EPS on the quarter. Net income rose to US$161.2 million. Net operating revenue grew, too, up 22.7% to US$776.4 million.
Water connections for the company increased at a pace of 2.7%, while sewage connections grew at 3.2% on the quarter.
The company currently supplies water to 25.6 million customers and sewer services to 22.9 million customers as of the end of Q1 2016.
