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Non-U.S. stocks will be particularly attractive to U.S. investors if the U.S. dollar continues to fall against foreign currencies. Many are predicting such a decline. One analyst even expects the dollar to “wipe out all its post-pandemic gains.”
A declining dollar
DX00,
benefits U.S. investors in non-U.S. stocks for two reasons: The local-currency gains of the non-U.S. stocks themselves, and the increased value of those local currencies in U.S. dollar terms.
U.S. investors who own non-U.S. stocks have been enjoying this double-barreled gain since last September, when the U.S. Dollar Index
DXY,
hit a high of nearly 115. It stands at around 100 now. Since that September high, non-U.S. stocks have beaten U.S. equities by more than three percentage points, as judged by the Vanguard Total International Stock ETF
VXUS,
and the Vanguard Total Stock Market ETF
VTI,
While there’s no guarantee the U.S. dollar will continue declining, a bet in favor of non-U.S. stocks has a non-currency-related factor in its favor as well: relative valuation. The U.S. stock market is the most overvalued in the world right now, as judged by the Cyclically-Adjusted Price/Earnings ratio (CAPE), which was made famous by Yale University professor (and Nobel laureate) Robert Shiller. In contrast to a 30.8 CAPE for the U.S, Europe’s is 17.4 and Asia’s is 13.8. (See chart below.)
The easiest and cheapest way for U.S. investors to bet on non-U.S. stocks is via an index fund. Vanguard Total International Stock ETF is one of the cheapest, with an expense ratio of just 0.07% — $7 per $10,000 invested.
If you want to try betting on individual stocks, below are those of non-U.S. companies that currently are recommended for purchase by any of the top-performing newsletters that my auditing firm monitors. They are grouped by the countries in which they are headquartered, and then in alphabetical order.
| Stock | Country |
| BROOKFIELD REINSURANCE LT (BNRE) | Bermuda |
| STONECO LTD (STNE) | Cayman Islands |
| COMPANIA CERVERCERIAS UNI (CCU) | Chile |
| NOKIA CORP (NOK) | Finland |
| AXA SA (AXAHY) | France |
| SANOFI (SNY) | France |
| TOTALENERGIES S E (TTE) | France |
| ALLIANZ SE (ALIZY) | Germany |
| BASF SE (BASFY) | Germany |
| BAYER A G (BAYRY) | Germany |
| DEUTSCHE POST AG (DHLGY) | Germany |
| SIEMENS A G (SIEGY) | Germany |
| VOLKSWAGEN A G (VWAGY) | Germany |
| AERCAP HOLDINGS NV (AER) | Ireland |
| CIMPRESS PLC (CMPR) | Ireland |
| EATON CORP PLC (ETN) | Ireland |
| MEDTRONIC PLC (MDT) | Ireland |
| SEAGATE TECHNOLOGY HOLDIN (STX) | Ireland |
| ITURAN LOCATION & CONTROL (ITRN) | Israel |
| PERION NETWORK LTD (PERI) | Israel |
| HONDA MTR LTD (HMC) | Japan |
| TOSHIBA CORP (TOSYY) | Japan |
| KONINKLIJKE PHILIPS NV (PHG) | Netherlands |
| NXP SEMICONDUCTORS NV (NXPI) | Netherlands |
| HOLCIM LTD NEW (HCMLY) | Switzerland |
| NOVARTIS AG (NVS) | Switzerland |
| BP P L C (BP) | United Kingdom |
| HENDERSON GROUP PLC (JHG) | United Kingdom |
| RIO TINTO (RIO) | United Kingdom |
| VODAFONE GROUP PLC NEW (VOD) | United Kingdom |
Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com
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