Disclaimer: This communication is provided for information purposes only and is not intended as a recommendation or a solicitation to buy, sell or hold any investment product. Readers are solely responsible for their own investment decisions.
In our quest to build winning stock portfolios, today we're diving into a key growth indicator: international sales.
Let's face it, a company limited to the domestic market has a ceiling on its potential. But those with international reach? The sky's practically the limit!
Here's why companies with growing international sales figures deserve a spot on your watchlist:
1. Expanding Market = Expanding Revenue:
International sales tap into entirely new customer bases, vastly exceeding the limitations of a single domestic market. This translates to significant revenue growth potential for the company, which is music to your ears as an investor.
2. Diversification is Key:
International sales act as a buffer against economic downturns in any one region.
If a company relies solely on the domestic market, a recession could be devastating. But with a diversified international customer base, the company is less susceptible to fluctuations in any single economy, leading to more stability and potentially stronger returns for you.
3. Innovation Breeds Opportunity:
Entering new markets often pushes companies to innovate and adapt their products or services. This can lead to exciting new offerings that resonate with a wider audience, further propelling growth and boosting your investment's value.
4. Currency Fluctuations Can Be a Bonus: International sales expose companies to foreign currencies. While there's always some risk involved, a favorable exchange rate can significantly increase the company's profits, translating to potential capital appreciation for your investment.
By preferring companies with strong and growing international sales figures, you're positioning your portfolio for potentially higher returns and building a foundation for long-term wealth creation.
How to find international sales figures
Sites like Finviz.com provides free financial visualisation data.
Key in the company you are interested to analyse and look under Revenue
Look under Revenue by Regions section
Half of Microsoft's sales have been from other countries out of US since the past 8 years, this is a very good sign of sales diversification.
Fortinet's international sales out of US are on an increasing trend, which is a good sign as they are reducing reliance on a single country.
Similarly, Tesla is also increasing their revenue contribution from other countries outside of US too.
Caveat: Companies focusing on domestic sales can do well too.
Although Walmart's international sales expansion efforts have not been effective (as seen in the decreasing revenue share % highlighted in blue), the company has still gone on to perform very well in the period of time.
Chipotle who focuses in US market only, also has done very well in terms of shareholders' returns.
Same goes to Waste Management also.
Remember, while international sales growth is a powerful indicator, it's just one piece of the puzzle. Always conduct thorough research to understand the company's overall strategy, financials, and competitive landscape.
By combining this analysis with a focus on companies expanding globally, you'll be well on your way to building a well-rounded portfolio with the potential for long-term success.
