With the stock market starting to show some love for smaller companies, it could also be a time to look towards investing overseas. That’s because the market’s returns have been dominated by big-cap tech stocks domiciled in the United States.
Investing internationally offers investors global diversification. And with inflation on the decline globally, and with global central banks nearing a point of interest rate cuts, international stocks stand to benefit in the years ahead.
While investing internationally can be challenging, investing in well-established businesses can be a great way to get started.
Fomento Economico Mexicano (FMX), or Femsa for short, is a Mexico-based company that bottles Coca-Cola products in Latin America. Shares are up just 7% over the past year, and they trade at a mouth-watering 7 times forward earnings.
Shares can likely grow along with increased beverage consumption in Latin America.
Action to take: Investors may like shares here as a long-term value play, given their low value and upside potential. Femsa pays a 1.8% dividend at current prices, which will be variable in part based on earnings and currency fluctuations.
For traders, options are thinly traded as a foreign stock on a U.S. exchange. But the January 2025 $125 calls, last trading for about $3.20, could see mid-double-digit returns on a rally through the end of the year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.