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On the Rise: 4 Must-Buy Non-U.S. Stocks With Solid Earnings
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Wall Street recouped all losses in early August and regained its steady northbound journey. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 8.4%, 18.5% and 21.4%, respectively.
Large-cap stocks across the board have also gained. This time, the rally is broad-based and not confined to the so-called “Magnificent 7.” Stocks of various non-U.S. giants with a favorable Zacks Rank also surged. Four such stocks with strong earnings estimate revisions are Taiwan Semiconductor Manufacturing Co. Ltd. (TSM - Free Report) , Spotify Technology S.A. (SPOT - Free Report) , Seagate Technology Holdings plc (STX - Free Report) and Eaton Corp. plc (ETN - Free Report) .
These stocks have provided more returns than the broad-market index — the S&P 500 — year to date. Moreover, these stocks have seen positive earnings estimate revisions in the last 30 days. Finally, all four stocks currently carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our four picks year to date.
Image Source: Zacks Investment Research
Non-U.S. Stocks Rated Buy
These four non-U.S. giants have more room to grow, supported by a favorable Zacks Rank and solid earnings estimate revisions.
Taiwan Semiconductor Manufacturing Co. Ltd.
Taiwan Semiconductor has become a new Wall Street poster boy on the global artificial intelligence (AI) frenzy. The company is the largest manufacturer of AI-based chipsets for the world’s best AI chipset developers. TSM is experiencing solid demand for its advanced technologies, such as 3-nanometer (nm) and 5nm. The growing adoption of its multi-project wafer processing service, which allows customers to reduce mask costs, is driving its customer momentum.
TSM is the largest manufacturer of NVIDIA Corp.’s (NVDA) chipsets. NVIDIA is globally the largest developers of generative AI-based chips. TSM also caters to Advanced Micro Devices Inc. (AMD), Apple Inc. (AAPL), Broadcom Inc. (AVGO) and Intel Corp. (INTC) to name a few.
For third-quarter 2024, Taiwan Semiconductor expects the solid adoption of AI and smartphones to boost the demand for its leading-edge process technologies. It projects revenues between $22.4 billion and $23.2 billion. The company also expects more than 20% growth in 2024 revenues due to rising demand for high-end chips used in AI applications.
Zacks Rank #2 TSM has seen positive earnings estimate revisions for the current and next year in the last 30 days. The stock price has jumped 64.6% year to date. Despite this, the average price target of brokerage firms represents an increase of 19% from the last closing price of $171.44. The brokerage target price is currently in the range of $170-$205.
Image Source: Zacks Investment Research
Seagate Technology Holdings PLC
Seagate’s fourth-quarter fiscal 2024 performance was propelled by momentum in mass capacity solutions due to stronger nearline cloud demand. These factors are expected to drive STX’s top-line growth in the current quarter. Mass Capacity exabyte shipments constitute more than 90% of total exabyte shipments. Pricing initiatives and a favorable product mix are aiding margin performance.
STX’s launch of Mozaic 3+ hard drive platform positions it well to benefit from megatrends like AI and machine learning. This is expected to boost demand for mass-capacity storage solutions over the long term. STX expects to complete the qualification with a lead CSP customer and initiate several cloud-customer qualifications in the current quarter.
Seagate anticipates first-quarter fiscal 2025 revenues to be $2.10 billion (+/- $150 million). Non-GAAP earnings for the fiscal first quarter of 2025 are expected to be $1.40 per share (+/- $0.20).
Management expects incremental improvements in mass capacity demand, owing to strengthening demand from global cloud customers and modest improvement in the nearline enterprise market. The increase in mass capacity revenues is likely to offset lower revenues from legacy markets.
Zacks Rank #1 STX has seen positive earnings estimate revisions for the current and next year in the last 30 days. The stock price has surged 22.3% year to date. Despite this, the average price target of brokerage firms represents an increase of 14.4% from the last closing price of $104.44. The brokerage target price is currently in the range of $65-$142.
Image Source: Zacks Investment Research
Spotify Technology S.A.
Spotify provides audio streaming services worldwide. SPOT operates through two segments, Premium and Ad-Supported. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers.
The Ad-Supported segment provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its subscribers on their computers, tablets, and compatible mobile devices. SPOT also offers sales, distribution and marketing, contract research and development, and customer support services.
Zacks Rank #1 SPOT has seen positive earnings estimate revisions for the current and next year in the last 30 days. The stock price has soared 82.9% year to date. Despite this, the average price target of brokerage firms represents an increase of 6.1% from the last closing price of $343.69. The brokerage target price is currently in the range of $200-$460.
Image Source: Zacks Investment Research
Eaton Corp. PLC
Eaton’s second-quarter earnings were better than estimates. ETN benefits from its research and development work that allows development of new products for its customers. ETN is aided by rising demand from the new AI data center and contributions from its organic assets.
Eaton is expanding via acquisitions and its strategy to manufacture in the region of its end market has helped in reducing production costs. Reindustrialization and megatrends will create more opportunities for ETN.
Eaton expects its third-quarter 2024 earnings in the range of $2.73-$2.83 per share. The company expects organic growth in the range of 8-9%. Eaton projects adjusted earnings per share in the range of $10.65-$10.75 for 2024, indicating an increase of 17% at the midpoint from the prior-year levels.
ETN raised its organic sales guidance for 2024 from the range of 7-9% to 8-9%. Eaton also raised its segment margin guidance from the range of 22.8-23.2% to 23.3-23.7%. The company raised its 2024 operating cash flow estimates to the range of $4.2-$4.4 billion from $4-$4.4 billion. Free cash flow guidance was raised to a range of $3.4-$3.6 billion from $3.2-$3.6 billion.
Zacks Rank #2 ETN has seen positive earnings estimate revisions for the current and next year in the last 30 days. The stock price has climbed 24.4% year to date. Despite this, the average price target of brokerage firms represents an increase of 15.5% from the last closing price of $299.69. The brokerage target price is currently in the range of $280-$385.
Image Source: Zacks Investment Research
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On the Rise: 4 Must-Buy Non-U.S. Stocks With Solid Earnings
Wall Street recouped all losses in early August and regained its steady northbound journey. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 8.4%, 18.5% and 21.4%, respectively.
Large-cap stocks across the board have also gained. This time, the rally is broad-based and not confined to the so-called “Magnificent 7.” Stocks of various non-U.S. giants with a favorable Zacks Rank also surged. Four such stocks with strong earnings estimate revisions are Taiwan Semiconductor Manufacturing Co. Ltd. (TSM - Free Report) , Spotify Technology S.A. (SPOT - Free Report) , Seagate Technology Holdings plc (STX - Free Report) and Eaton Corp. plc (ETN - Free Report) .
These stocks have provided more returns than the broad-market index — the S&P 500 — year to date. Moreover, these stocks have seen positive earnings estimate revisions in the last 30 days. Finally, all four stocks currently carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our four picks year to date.
Image Source: Zacks Investment Research
Non-U.S. Stocks Rated Buy
These four non-U.S. giants have more room to grow, supported by a favorable Zacks Rank and solid earnings estimate revisions.
Taiwan Semiconductor Manufacturing Co. Ltd.
Taiwan Semiconductor has become a new Wall Street poster boy on the global artificial intelligence (AI) frenzy. The company is the largest manufacturer of AI-based chipsets for the world’s best AI chipset developers. TSM is experiencing solid demand for its advanced technologies, such as 3-nanometer (nm) and 5nm. The growing adoption of its multi-project wafer processing service, which allows customers to reduce mask costs, is driving its customer momentum.
TSM is the largest manufacturer of NVIDIA Corp.’s (NVDA) chipsets. NVIDIA is globally the largest developers of generative AI-based chips. TSM also caters to Advanced Micro Devices Inc. (AMD), Apple Inc. (AAPL), Broadcom Inc. (AVGO) and Intel Corp. (INTC) to name a few.
For third-quarter 2024, Taiwan Semiconductor expects the solid adoption of AI and smartphones to boost the demand for its leading-edge process technologies. It projects revenues between $22.4 billion and $23.2 billion. The company also expects more than 20% growth in 2024 revenues due to rising demand for high-end chips used in AI applications.
Zacks Rank #2 TSM has seen positive earnings estimate revisions for the current and next year in the last 30 days. The stock price has jumped 64.6% year to date. Despite this, the average price target of brokerage firms represents an increase of 19% from the last closing price of $171.44. The brokerage target price is currently in the range of $170-$205.
Image Source: Zacks Investment Research
Seagate Technology Holdings PLC
Seagate’s fourth-quarter fiscal 2024 performance was propelled by momentum in mass capacity solutions due to stronger nearline cloud demand. These factors are expected to drive STX’s top-line growth in the current quarter. Mass Capacity exabyte shipments constitute more than 90% of total exabyte shipments. Pricing initiatives and a favorable product mix are aiding margin performance.
STX’s launch of Mozaic 3+ hard drive platform positions it well to benefit from megatrends like AI and machine learning. This is expected to boost demand for mass-capacity storage solutions over the long term. STX expects to complete the qualification with a lead CSP customer and initiate several cloud-customer qualifications in the current quarter.
Seagate anticipates first-quarter fiscal 2025 revenues to be $2.10 billion (+/- $150 million). Non-GAAP earnings for the fiscal first quarter of 2025 are expected to be $1.40 per share (+/- $0.20).
Management expects incremental improvements in mass capacity demand, owing to strengthening demand from global cloud customers and modest improvement in the nearline enterprise market. The increase in mass capacity revenues is likely to offset lower revenues from legacy markets.
Zacks Rank #1 STX has seen positive earnings estimate revisions for the current and next year in the last 30 days. The stock price has surged 22.3% year to date. Despite this, the average price target of brokerage firms represents an increase of 14.4% from the last closing price of $104.44. The brokerage target price is currently in the range of $65-$142.
Image Source: Zacks Investment Research
Spotify Technology S.A.
Spotify provides audio streaming services worldwide. SPOT operates through two segments, Premium and Ad-Supported. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers.
The Ad-Supported segment provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its subscribers on their computers, tablets, and compatible mobile devices. SPOT also offers sales, distribution and marketing, contract research and development, and customer support services.
Zacks Rank #1 SPOT has seen positive earnings estimate revisions for the current and next year in the last 30 days. The stock price has soared 82.9% year to date. Despite this, the average price target of brokerage firms represents an increase of 6.1% from the last closing price of $343.69. The brokerage target price is currently in the range of $200-$460.
Image Source: Zacks Investment Research
Eaton Corp. PLC
Eaton’s second-quarter earnings were better than estimates. ETN benefits from its research and development work that allows development of new products for its customers. ETN is aided by rising demand from the new AI data center and contributions from its organic assets.
Eaton is expanding via acquisitions and its strategy to manufacture in the region of its end market has helped in reducing production costs. Reindustrialization and megatrends will create more opportunities for ETN.
Eaton expects its third-quarter 2024 earnings in the range of $2.73-$2.83 per share. The company expects organic growth in the range of 8-9%. Eaton projects adjusted earnings per share in the range of $10.65-$10.75 for 2024, indicating an increase of 17% at the midpoint from the prior-year levels.
ETN raised its organic sales guidance for 2024 from the range of 7-9% to 8-9%. Eaton also raised its segment margin guidance from the range of 22.8-23.2% to 23.3-23.7%. The company raised its 2024 operating cash flow estimates to the range of $4.2-$4.4 billion from $4-$4.4 billion. Free cash flow guidance was raised to a range of $3.4-$3.6 billion from $3.2-$3.6 billion.
Zacks Rank #2 ETN has seen positive earnings estimate revisions for the current and next year in the last 30 days. The stock price has climbed 24.4% year to date. Despite this, the average price target of brokerage firms represents an increase of 15.5% from the last closing price of $299.69. The brokerage target price is currently in the range of $280-$385.
Image Source: Zacks Investment Research