Five stocks for investors who want to broaden their growth horizons beyond the S&P 500

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Regardless of political risks, investors can be well served by participating in large economies with a rapidly growing middle class.

U.S. investors know how successful a strategy of investing in the S&P 500 through an index fund has been, especially as large technology companies have led such strong growth over the past decade. But markets change, as is being proven by the rise in U.S. interest rates. And tech isn’t always the leading choice for investing.

In addition to looking beyond tech, which has such a high concentration within the S&P 500, investors might want to add exposure outside the U.S. to take advantage of growing middle classes in emerging markets and innovation in other developed markets. The sales and EPS growth through 2022 and the growth estimates through 2025 are mixed but tend to be higher than those of the indexes.HDFC Bank HDFC Bank is growing rapidly as private banks take business in India from government-owned banks, which haven’t been investing in new technology, according to Agnihotri. She said she was comfortable with HDFC because the bank had taken a careful approach during multiple credit cycles.

Deutsche Boerse AG Deutsche Boerse AG DB1, -0.03% is expected by analysts working for brokerage firms to show the slowest increases in revenue and earnings per share over the next two years among the five companies in the table, above. However, Agnihotri believes the company is reasonably valued, especially when taking cash flow into account.

Agnihotri said she admires the company’s “incredibly long-term” approach to managing the “balance between desirability and exclusivity” for its brands. Thom said that no matter where this subsidiary is based or its stock listed, he believes in the company’s growth potential in China’s premium beer market. You can see in the table that analysts expect rapid earnings growth through 2025.

 

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