5 Great Foreign Stocks Selling at a Discount

Alumina Limited

This Australian company has a single moneymaker: its 40% stake in a joint venture with Alcoa that mines bauxite and refines it into alumina for sale to aluminum smelters around the world. Aluminum demand is growing faster than demand for most other metals, thanks to its use in aircraft frames and, increasingly, cars. Pricing has also benefited from China's efforts to reduce its smelter capacity in order to cut down on pollution.

The joint venture with Alcoa has already made its costliest investments and is now reaping the returns, allowing Alumina Limited (AWCMY (opens in new tab)) to more than double its dividend last year. The stock currently yields 6.6%.

Amadeus IT Group

This Madrid-based travel software specialist is the leading supplier of booking data to travel agencies and corporations around the world. Amadeus IT Group (AMADY (opens in new tab)) also provides specialized commercial software for airlines, a faster-growing business that now accounts for nearly half of the company's bottom line. The firm pays out half of its annual profit in dividends, and this year it earmarked the other half for a share repurchase. The stock yields 1.5%.

Amadeus shares trade at 24 times estimated 2019 earnings. That's higher than the 19 times earnings that Expedia shares command, but the U.S. travel retailer faces more competition and lower profit margins in the consumer-focused segment of the industry.

BNP Paribas

France's largest bank is a Europe-focused giant that pays a generous annual dividend, giving the stock a 5% current yield. The growth in deposits and loans accelerated last year. Doubtful loans (those unlikely to be paid in full) accounted for just 3.3% of the bank's total at the end of 2017, down from 3.8% a year earlier.

Yet shares of BNP Paribas (BNPQY (opens in new tab))) trade at a hefty discount to the per-share book value of its assets. As the European economy continues to heal and interest rates rise from historic lows, however, that discount should narrow. That's what happened in recent years at Bank of America; BofA shares now fetch a 27% premium to book value. BNP Paribas is a top holding of Oakmark International (OAKIX (opens in new tab)), a member of the Kiplinger 25, the list of our favorite no-load funds.

JD.com

This fast-expanding Chinese e-commerce company doesn't look cheap, with shares trading at 30 times estimated earnings for 2019. But cash generated from operations has been on an upswing, and last year it more than covered JD's hefty investments in logistics infrastructure, including warehouses and call centers. Analysts expect per-share earnings to jump 90% compared with expected 2018 levels. The lofty growth and well-regarded leadership of JD.com (JD (opens in new tab)) give it a leg up in the fight for China's huge, rapidly expanding and still fragmented market for online shopping.

Smith & Nephew

The U.K.-based health care company is a geographically diversified supplier of knee and hip implants, as well as equipment for trauma treatment, wound care and orthopedics. Revenue growth has been modest recently but will benefit from the gradual aging of the population in rich countries and in developing ones, where Smith & Nephew (SNN (opens in new tab)) is now expanding fastest. Given the company's modest scale, relatively low debt and attractive product lines, it is often rumored to be a takeover target as competitors within the industry consolidate. The stock trades at 17 times estimated earnings for 2019 and yields 2.0%. The company increased its annual dividend by 14% this year.