Investing internationally can offer unique opportunities to capture returns from markets outside the U.S., diversify your portfolio, and potentially balance weaker performance in one region with stronger gains elsewhere. While the U.S. stock market is the largest globally, stocks of roughly 17,500 companies outside the U.S. make up almost 40% of the $82 trillion global equity market.

For investors looking to tap into this broad pool of potential, I have highlighted three fundamentally sound global stocks, namely, Taiwan Semiconductor Manufacturing Company Limited (TSM), Alibaba Group Holding Limited (BABA), and Rio Tinto Group (RIO).

This year has been pivotal for the global economy, with a record number of elections and central banks pivoting to interest rate cuts. George Brown, Senior US Economist, believes that while rate cuts can support growth, moving too quickly may carry risks, particularly as the U.S. economy is on track for a soft landing without a recession. He said that aggressive rate cuts at this stage could reignite inflation concerns, a sentiment echoed by over 60% of survey respondents.

Meanwhile, global economic growth is expected to continue at a steady pace, with real GDP forecasted to grow by 3.2% in both 2024 and 2025. However, growth rates will likely differ between advanced and emerging economies, making international stocks with solid growth prospects appealing to those aiming to hedge against domestic market risks.

With that being said, let’s evaluate the fundamentals of the stocks mentioned above in detail:

Taiwan Semiconductor Manufacturing Company Limited (TSM)

Headquartered in Hsinchu City, Taiwan, TSM manufactures, tests, and markets integrated circuits and other semiconductor products globally. Its products are used in automotive electronics, high-performance computing, and mobile device markets.

On October 4, the company signed a memorandum of understanding with Amkor Technology, Inc. (AMKR) to enhance Arizona’s advanced packaging and testing capabilities, bolstering the region’s semiconductor ecosystem. Under this agreement, TSM will contract AMKR for turnkey packaging and testing services at a planned facility in Peoria. These services will support TSM’s customers, particularly those utilizing Phoenix’s advanced wafer fabrication facilities.

TSM’s net sales increased 38.9% year-over-year to NT$759.69 billion ($23.60 billion) in the third quarter that ended September 30, 2024. Its gross profit grew 48.1% from the prior year’s quarter to NT$439.34 billion ($13.65 billion), while its income from operations came in at NT$360.77 billion ($11.21 billion), up 58.2% year-over-year. In addition, the company’s net income and EPS increased 54.2% year-over-year to NT$325.26 billion ($10.10 billion) and NT$12.54, respectively.

The consensus revenue estimate of $25.02 billion for the fiscal fourth quarter (ending December 2024) represents a 26.3% increase year-over-year. The consensus EPS estimate of $1.95 for the same quarter indicates a 35.3% improvement year-over-year. The company has an excellent surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.

The stock has gained 105.5% over the past year and 80.3% year-to-date to close the last trading session at $187.48.

TSM’s promising fundamentals are apparent in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

It has an A grade for Sentiment and Quality. In the 91-stock Semiconductor & Wireless Chip industry, it is ranked #9.

Beyond what we stated above, we also have TSM ratings for Growth, Value, Momentum, and Stability. Get all TSM ratings here.

Alibaba Group Holding Limited (BABA)

Based in Hangzhou, China, BABA offers technology infrastructure and marketing reach to help merchants, brands, and retailers connect with international users and customers. Its segments include China Commerce; International Commerce; Local Consumer Services; Cainiao; Cloud; Digital Media and Entertainment; Innovation Initiatives and Others.

On September 5, BABA partnered with Mastercard Incorporated (MA) and Cardless to introduce a co-branded credit card that rewards businesses for cross-border and domestic purchases on Alibaba.com. The partnership would simplify shopping, boost customer loyalty, and strengthen BABA’s global presence.

For the fiscal 2025 first quarter that ended June 30, 2024, BABA’s revenue increased 3.9% year-over-year to $33.47 billion. Its income from operations amounted to $4.95 billion. Plus, the company reported its adjusted EBITA at $6.20 billion for the quarter. Moreover, non-GAAP net income and non-GAAP EPS came in at $5.60 billion and $0.28 for the quarter, respectively.

Analysts expect BABA’s revenue for the fiscal third quarter ending December 2024 to increase 9.8% year-over-year to $39.75 billion. Likewise, its EPS for the ongoing quarter is expected to grow 3.9% from the prior year to $2.74.

Shares of BABA have gained 46.8% over the past six months and 31.8% year-to-date to close the last trading session at $102.17.

BABA’s POWR Ratings reflect its positive outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.

It also has a B grade for Momentum and Quality. Out of 41 stocks in the B-rated China industry, it is ranked #16. To see BABA’s Growth, Value, Stability, and Sentiment ratings, click here.

Rio Tinto Group (RIO)

London-based mining and metals company RIO is involved in the global exploration and production of materials through four segments: Iron Ore; Aluminum; Copper; and Minerals. Its business also includes diamond mining, sorting and marketing, and lithium exploration.

On October 9, the company agreed to acquire Arcadium Lithium for $6.7 billion, a deal that will catapult it to become the world’s third-largest miner of the metal used in electric vehicle batteries. Already a leader in iron ore, RIO is expanding its focus on processing high-end, low-carbon materials essential for the energy transition.

Through the acquisition, the company would gain access to lithium mines and processing facilities in Argentina, Australia, Canada, and the U.S., fueling future growth.

On August 15, RIO partnered with the Queensland Government to strengthen the heavy industrial manufacturing base around Gladstone and boost renewable energy investments. The partnership secures the future of Boyne Smelters Limited, Australia’s second-largest aluminum smelter, ensuring sustainability and long-term growth for RIO’s operations.

For six months of fiscal 2024 that ended on June 30, 2024, RIO reported consolidated sales revenue of $26.80 billion, indicating a marginal year-over-year increase. The company’s operating profit for the same period rose 14% from the year-ago value to $8.26 billion. In addition, profit after tax for the period and EPS came in at $5.89 billion and $3.56, up 19.1% and 13.3% year-over-year, respectively.

Street expects RIO’s EPS and revenue for the fiscal year ending in December 2024 to come in at $7.02 and $52.90 billion, respectively. Over the past month, the stock has gained 4.4%, closing the last trading session at $65.95.

RIO’s strong prospects are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a B grade for Value, Stability, and Quality. The stock is ranked #2 among the 29 stocks in the Industrial - Metals industry. Click here to see the other RIO ratings for Growth, Momentum, and Sentiment.

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TSM shares were trading at $207.75 per share on Thursday afternoon, up $20.27 (+10.81%). Year-to-date, TSM has gained 101.48%, versus a 23.83% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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