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,
+0.01%
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,
+0.20%
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,
+0.16%
and the Vanguard Total Stock Market ETF
VTI,
-0.01%.
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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