3 Foreign Stocks with Great Growth Prospects

Despite gains for the month of April, the US markets have not been supported by strong economic fundamentals. Weaknesses in growth and the labor sector have come as a disappointment, compounded by other dismal economic reports. Most gains are a result of strong earnings and this may be a good time to look at investments abroad.

Despite gains for the month of April, the US markets have not been supported by strong economic fundamentals. Weaknesses in growth and the labor sector have come as a disappointment, compounded by other dismal economic reports. Most gains are a result of strong earnings and this may be a good time to look at investments abroad.

England’s Growth Story

Services sector growth surged in April, coming in above expectations. Markit’s Services PMI increased from 58.9 in March to 59.5, the highest level recorded in 8 months. This reading runs contrary to expectations of a decline predicted by some economists.

This is further indication that the economy is set to rebound after growing just 0.3% during the year’s first quarter. It also adds weight to a forecast by the National Institute of Economic and Social Research that the economy will record 2.5% growth for the whole year. The report is also well timed, coming in right ahead of general elections.

Taiwan’s Economy Gathers Steam

Q1 GDP for Taiwan increased to 3.46% on a year-over-year basis according to official data released last week. This is marginally lower than government estimates released in February and depicts the overall stability of the small yet dynamic economy.

The country’s central bank is one of the few that has stayed away from monetary easing measures. It is largely due to its success in moving up the value chain to become a modern economy based on consumer demand.

Several hi-tech suppliers from the country have leveraged the rising demand for consumer electronics across the world. Two of its largest companies are suppliers for Apple Inc. (AAPL - Analyst Report) and corporate profits have been lifted by the success of iPhone sales.

Norway Named Top Investment Destination

Norway’s central bank may wait till June before lowering interest rates. The cut will be made to combat the effect of a continuing slump in crude prices, a significant strain on the largest producer of oil in Europe.

However, Brent crude has gained 43% from the low it hit in January. At the same time, economists are divided over such a decision if it comes. This is because of the lack of evidence to suggest lower oil prices are causing an economic slowdown.

Meanwhile, the country has made its maiden entry into AT Kearney’s list of the best countries to invest. The list was launched in 1998 and the country has been lauded for its “highly educated workforce” as well as its substantial natural resources. The consulting firm has also noted that the country has raised tax deductions on research and development activities.

Our Choices

Below we present 3 foreign stocks set to benefit from these trends. Finding a great growth stock can be a tough task. But thanks to our new style score system we have been able to identify a few growth stocks which have incredible potential in the near term.

While growth is typically associated with revenues or Earnings Per Share (EPS) growth, the Growth Style Score goes beyond these obvious measures to incorporate elements from the company’s financial statements to get a true sense of the quality and sustainability of its growth.

Our research shows that stocks with Growth Style Scores of ‘A’ or ‘B’ when combined Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) offer the best investment opportunities in the growth investing space.

Silicon Motion Technology Corp. (SIMO - Snapshot Report) is a Taiwan-based company which is designer, developer, and marketer of universally compatible and low-power semiconductor solutions.

Silicon Motion Technology holds a Zacks Rank #1 (Strong Buy) and has a Growth Style Score of ‘B.’ The company has expected earnings growth of 33.3% for the current year.

ARM Holdings plc (ARMH - Snapshot Report) is a designer of microprocessors and is also involved with associated software and technology. Based in the United Kingdom, it is also involved with physical intellectual property.

Apart from a Zacks Rank #2 (Buy), ARM Holdings has a Growth Style Score of ‘B.’ The company has expected earnings growth of 42.6% for the current year.

Norsk Hydro ASA (NHYDY - Snapshot Report) is involved in various activities in the aluminum industry and is based in Norway. This includes refining, smelting, recycling, and re-melting aluminum as well as extraction of bauxite.

Norsk Hydro holds a Zacks Rank #2 (Buy) and has a Value Style Score of ‘A.’ The company has expected earnings growth of 65% for the current year.

Despite the continuing Bull Run in the US market, volatility is a matter of serious concern. This is why it would be a good idea to diversify into international stocks. The promise of strong growth, backed by strong fundamentals means these additions would make good additions to your portfolio.

This article originally appeared at Zacks.com. Reprinted with permission.

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