18 of the Best Stocks and ETFs to Buy Based on 2024 Expert Forecasts

There are a few things in life you can depend on. Unsolicited advice from your parents, for instance. Or being one sock short after washing a load of laundry. You can also rely on my colleague Christine Benz to share the long-term stock and bond return forecasts of several highly respected investment firms—including BlackRock, J.P. Morgan, Morningstar Investment Management, Research Affiliates, Schwab, and Vanguard—each January.

Why does she engage in this annual ritual?

“Long-term return projections can be useful and are arguably even mission-critical in a financial planning context,” she argues. “Without some expectation of what market returns might be, it’s difficult to know how much to save, whether a retirement nest egg is adequate, or whether an in-retirement spending rate is too high. Long-term historical returns might fill that role, but at various points in time, such as early 2000 or early 2022, they might be unrealistically high.”

What are the pros expecting from the markets in the next several years? Most expect U.S. stocks to outperform U.S. bonds—but not by much. It’s not too surprising that the expected return difference between the two asset classes is only modest, given where bond yields stand today. More striking, though, is that every firm surveyed expects international stocks to outperform U.S. stocks over the next decade by a sizable margin.

For those investors who’d like to increase their exposure to non-U. S. stocks, here are Morningstar’s best international stocks and ETFs to buy.

10 of the Best Undervalued International Stocks to Buy

These 10 international companies are among the most undervalued stocks in the Morningstar Global Markets ex-US Moat Focus Index as of Jan. 10, 2024.

1) Tencent Holdings TCEHY

2) Bayer BAYRY

3) Yum China YUMC

4) Alibaba Group BABA

5) Lloyd’s Banking Group LYG

6) NetEase NTES

7) The Swatch Group SWGAY

8) Millicom International Cellular TIGO

9) Bayerische Motoren Werke BMWYY

10) Roche RHHBY

For those comfortable investing in individual stocks, Morningstar’s strategy for stock investing applies around the globe. First, favor companies with durable competitive advantages, or economic moats. These companies should be able to fend off competition and outearn their costs of capital for years to come. Then, buy these companies when their stocks are trading below what they’re worth—in our parlance, below our fair value estimates. We think undervalued stocks with economic moats make excellent long-term investments.

The Morningstar Global Markets ex-US Moat Focus Index is a quality-focused subset of the Morningstar Global Markets ex-US Index, a broad index representing 97% of the developed-markets (excluding the United States) and emerging-markets market capitalization. Morningstar ranks the wide- and narrow-moat stocks in the broad index by lowest price/fair value to find the 50 cheapest wide- and narrow-moat stocks. These stocks represent the most compelling values in the global moat universe.

8 Best International-Stock ETFs

For investors who would rather not pick individual stocks, several exchange-traded funds provide broad-based exposure to international stocks. Here’s Morningstar’s shortlist of the best international-stock ETFs: those ETFs that earn a Morningstar Medalist Rating of Gold with 100% analyst coverage. Ratings are as of Jan. 10, 2024.

1) Dimensional International Core Equity Market ETF DFAI

2) Dimensional International Small Cap Value ETF DISV

3) Dimensional International Small Cap ETF DFIS

4) iShares Core MSCI Total International Stock ETF IXUS

5) Vanguard FTSE All-World ex-U. S. ETF VEU

6) Vanguard FTSE All-World ex-U. S. Small Cap ETF VSS

7) Vanguard International Dividend Appreciation ETF VIGI

8) Vanguard Total International Stock ETF VXUS

There are several different international Morningstar Categories represented on our Gold-rated list. DFAI, IXUS, VEU, VIGI, and VXUS all land in one of Morningstar’s large-cap foreign stock categories. Foreign large-cap funds tend to focus on Europe, specifically, established markets in France, Germany, Switzerland, Netherlands, Spain, Italy, and the United Kingdom. They often hold significant positions in Asia, as well. And although they dabble in emerging-markets stocks, they often limit their exposure to those markets to about 15% of assets. Foreign small/mid-cap funds often carry larger emerging-markets positions.

As is always the case, read an ETF’s Analyst Report for a better sense of what regions it invests in, what size companies it favors, and so on. Knowing how an ETF’s portfolio diverges from the average allows for better performance expectations—and better investor outcomes. For instance, emerging-markets stocks tend to be more volatile than developed-markets stocks. As a result, international-stock ETFs with higher emerging-markets stakes will exhibit performance very different from their peers’ when emerging markets soar or sink.

How to Find More of the Best International Stocks and ETFs to Buy

Investors who’d like to find more international stocks and ETFs to consider can do a few different things.

• Download all the international stock holdings from the Morningstar Global Markets ex-US Moat Focus Index’s holdings page. Remember, the index focuses exclusively on undervalued non-U. S. stocks with wide or narrow Morningstar Economic Moat Ratings.
• Expand your search to include highly rated mutual funds, too. You’ll find some of Morningstar’s top-rated international-stock mutual funds on our Core Foreign Funds and Foreign Index Funds lists.
• ETF diehards who’d like more options to consider can find more highly rated international-stock ETFs (and highly rated ETFs in other categories, too) on our Medalist ETFs list.