Hidden in Plain Sight
There are plenty of outstanding businesses outside the United States that we think are simply too good to ignore
Our Quest for Quality Around the World
Recently, we highlighted the attractive opportunity we see in international equities.¹ On the back of more than a decade of underperformance relative to the U.S., we believe international now has some notable winds at its back, including cheap absolute and relative valuations and moderating dollar strength. Regardless of present tailwinds, we believe that investors who either have or are considering an international allocation should take a discerning approach. In a universe where many publicly traded companies offer low returns on capital, low growth, high leverage, and negative free cash flow, we believe it’s crucial to narrow in on truly exceptional businesses with characteristics supportive of long-term compounding. In some cases, these businesses operate in specialized segments of the global economy where a U.S.-based equivalent company either doesn’t exist or, in our opinion, is significantly inferior.
Here, we offer four examples to illustrate the unique, secular growth opportunities we identify outside the U.S.2 Their market capitalizations range from $50B to $500B, but it would be a mistake to assume large cap is the exclusive domain of high-quality growth companies. Many small- and SMID-cap companies with dominant market share positions in a given niche or geography have the potential to become the leaders of tomorrow. In some instances, these companies have achieved scale and are broadening their horizons globally. In other cases, they follow a playbook already tested and proven in the U.S., allowing them to achieve scale efficiently. Across the spectrum of sizes and regions, the common thread we seek is high-quality, unique businesses with a track record of sustainably compounded growth, which in turn can drive robust stock performance.
Important Disclosures
1 Polen Capital, Opportunity Beyond Borders, April 2023.
2 ASML is a holding in Polen Capital’s International Growth strategy as of March 31, 2023. CSL is a holding in Polen Capital’s International and Global Growth portfolios as of March 31, 2023. MELI is a holding in Polen Capital’s International and Emerging Markets Growth portfolios as of March 31, 2023. LVMH is a holding in Polen Capital’s Global Growth and International Growth strategies as of March 31, 2023.
This information is provided for illustrative purposes only. Opinions and views expressed constitute the judgment of Polen Capital as of May 2023 and may involve a number of assumptions and estimates which are not guaranteed and are subject to change without notice or update. Although the information and any opinions or views given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness or accuracy. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. The views and strategies described may not be suitable for all clients. This document does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction.
This should not be construed as a recommendation to purchase, hold or sell any particular security. There is no assurance that any securities discussed herein will remain in the portfolio or that the securities sold will not be repurchased. The securities discussed do not represent the entire portfolio. Actual holdings will vary depending on the size of the account, cash flows, and restrictions. It should not be assumed that any of the securities, transactions or holdings discussed will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. A complete list of our past specific recommendations for the last year is available upon request.
Past performance does not guarantee future results and profitable results cannot be guaranteed.
