3 "Buy Rated" International Tech Stocks to Invest In

As the technology sector continues to show immense growth potential based on innovative offerings, technology stocks continue to rise. But considering the weakness in the domestic economy, it might be a good idea to diversify to well-performing international tech stocks. Sea (SE), Johnson Controls (JCI), and Bilibili (BILI) are three such stocks that have the potential for strong upside over the long run.

Technology stocks have outperformed the broader markets since March 2020. However, it is not just tech companies from the United States that have performed well. Stocks of overseas tech companies have been on a winning streak as well. Given the economic weakness in our domestic economy, some of these international tech stocks are attractive picks now.

Moreover, the Biden-Harris administration can bring in new governance policies for domestic companies, especially the technology sector. Thus, tech stocks could see an impact of these changes in the times to come. Also, uncertainty in the markets over the second wave of COVID-19, and a holdup in fiscal stimulus will continue to weigh on U.S. stocks.

In such a scenario, diversifying your portfolio with international tech stocks could be a smart move.  These stocks have benefitted immensely due to their presence in disruptive services like e-commerce, cloud computing, gaming, and on-demand video. Three such stocks are Sea Ltd. ADR (SE), Johnson Controls International Plc Ordinary Share (JCI), and Bilibili Inc. (BILI).  Let us take a look at the benefits of each of these international stocks.

Sea Ltd. ADR (SE)

SE is a Singapore-based company that operates in digital entertainment, online financial services, as well as e-commerce. It operates across Southeast Asia, Latin America, and the rest of Asia. SE’s Garena platform offers eSports operations and livestreaming of gameplay. The company also operates the Shopee e-commerce platform.

During the third quarter that ended September 2020, SE’s total revenue soared 98.7% year-over-year to $1.2 billion, led by orders in the e-commerce segment. The company’s e-commerce revenue surged 173.3% year-over-year to $618.7 million. The bookings for the quarter climbed 109.5% to $944.7 million. SE benefited immensely from the popularity of its highest grossing mobile game in Latin America and Southeast Asia.

The street estimates revenue for the fourth quarter to be $1.4 billion, indicating an 83.2% year-over-year increase. Meanwhile, EPS is likely to grow 45.8% in 2021. SE is upbeat about the performance of its digital entertainment and e-commerce segments. Hence, it has raised its guidance for digital entertainment bookings for the full year 2020 to over $3.1 billion, from the previous range of $1.9 billion to $2.0 billion. Similarly, the company now expects e-commerce revenue for the full year 2020 to exceed $2.3 billion from the previous guidance of $1.7 billion and $1.8 billion.

SE ended yesterday’s session at $170.62, rallying 343.1% on a year-to-date basis. Over the past six months, the stock has surged 187.6%.

How does SE stack up for the POWR Ratings?

A for Trade Grade

B for Buy & Hold Grade

A for Peer Grade

A for Industry Rank

B for Overall POWR Rating.

It is ranked #10 out of 58 stocks in the Internet industry.

Johnson Controls International Plc Ordinary Share (JCI)

JCI is an American Irish multinational that primarily manufacturers fire, HVAC, and security equipment for buildings. Its key products include anti-theft devices, access control and video management systems for commercial, industrial, retail, residential, and governmental customers. The company operates across 2,000 locations across six continents that includes North America, EMEA/LA, and Asia Pacific. JCI employs energy efficiency solutions and technical services to enable safety and sustainability.

Johnson Controls announced the selection of Ontotext's GraphDB for semantic data creation and management for their Metasys system. The latest version of Metasys increases team productivity, lowers risk, and bolsters building efficiency. It also helps to identify and solve issues and prevent unauthorized access.

JCI’s EPS for its fourth quarter that ended September 2020, dropped 22% year-over-year to $0.84. Meanwhile, its revenue for the period declined 5.1% year-over-year to $5.9 billion, due to the impact of COVID-19. The company focused on cost mitigations increasingly during the fourth quarter.

Analysts expect revenue for full year 2021 to increase 3.1% year-over-year to $23 billion. Meanwhile, EPS is likely to grow at the rate of 11.2% per annum for the next 5 years.

On a year-to-date basis, JCI climbed 11.4% to close yesterday’s trading session at $44.71. The stock is currently trading 6.4% below its 52-week high at $47.58. During the past six months, JCI has gained 59.4%.

It’s no surprise that JCI is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade and Buy and Hold Grade, and a “B” for Industry Rank. Among the 51 stocks in the Auto Parts industry, it’s ranked #18.

Bilibili Inc. (BILI)

BILI is an online entertainment service for millennial audiences in China. The platform offers various genres and forms of media that includes videos, live broadcasting, and mobile games. The company has an association with Tencent Holdings for creating existing and new animations and games on its platform.

In October, BILI expanded its cooperation with BBC studios for the commissioning of new content and to develop BBC Studios, or Bilibili IP, jointly for the Chinese market. The content lineup includes documentaries, science content, and an animation project. Programs which highlight Chinese history and civilization will be prioritized

During the second quarter that ended June 2020, BILI’s revenue surged 70% year-over-year to $370.5 million, driven by an increase in value-added services and mobile games revenue. The average monthly active users (MAUs) reached 171.6 million, indicating an increase of 55% over the previous year. Also, average monthly paying users soared 105% year-over-year to 12.9 million. BILI’s loss per share for the second quarter was $0.23.

The consensus estimate for third quarter revenue is $465.9 million, up 75.4% year-over-year. BILI is also expected to post 45% growth in EPS for 2021.

BILI rallied 168.8% year-to-date to end yesterday’s session at $50.05. Over the past six months, the stock has soared 62.1%.

The POWR Ratings reveal BILI has an overall rating of “Buy” with an “A” in Trade Grade and Peer Grade, and a “B” in Industry Rank and Buy and Hold Grade. The stock is also ranked 19 in the China industry.

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SE shares were trading at $166.81 per share on Wednesday afternoon, down $3.81 (-2.23%). Year-to-date, SE has gained 314.74%, versus a 13.28% rise in the benchmark S&P 500 index during the same period.

About the Author: Namrata Sen Chanda

Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.


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