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3 Strong International Stocks to Buy for Diversification Most investors recognize the value of building a diversified portfolio but aren't sure of the best way to make it happen. One area to look is in international equities, as these stocks can help you take advantage of growing economies outside of the United States and spread out your risk. That's why we've put together a list of 3 strong international stocks to buy

By Sean Sechler

entrepreneur daily

This story originally appeared on MarketBeat

Depositphotos.com contributor/Depositphotos.com via MarketBeat

One of the smartest strategies for successfully managing a long-term investment portfolio is to use the concept of diversification to your advantage. It's a fairly easy technique to understand, as you don't want to have all of your investment eggs in one basket. Diversification can help investors to reduce their exposure to market volatility, minimize their losses, and provide them with more opportunities to generate returns. While there's nothing wrong with allocating more of your capital to areas of the market that you are confident in, overlooking the power of diversification can eventually become a big mistake.

Most investors recognize the value of building a diversified portfolio but aren't sure of the best way to make it happen. One area to look is in international equities, as these stocks can help you take advantage of growing economies outside of the United States and spread out your risk. That's why we've put together a list of 3 strong international stocks to buy for diversification. Keep reading on to learn more.

SAP SE (NYSE:SAP)

Buying international stocks can be intimidating for newer investors, as there are several intricacies such as currency exchange rates, geopolitical risks, and more to consider before adding a company to your portfolio. That's why SAP is an attractive option for investors looking to diversify, as it's an established company based in a stable country with a strong currency. SAP is a Germany-based company that is a leading provider of enterprise application software used for accounting, customer relationship management, and supply chain management.

This stock is worth a look because there is a good chance investors are undervaluing SAP as it transitions from a traditional licenses revenue business model to cloud software. The company should see its margins expand greatly as a result of improving scale in its cloud offerings, which is certainly appealing. In Q1, SAP's cloud revenue growth was up 7% year-over-year to €2.14 billion and the company had the highest order entry growth across cloud and software in five years. The stock also offers investors a 2.86% dividend yield and recently reclaimed all of the major moving averages, offering an attractive entry point for long-term investors at this time.

Vale S.A. (NYSE:VALE)

This Brazil-based company offers exposure to emerging markets as well as iron ore, a material that is essential in steelmaking. Steel should remain in high demand as the world's economy recovers from the impacts of the pandemic, and that bodes well for Vale. It's one of the world's largest iron ore miners and one of the world's largest nickel producers. We know that commodity prices including iron ore have been steadily rising this year, which is a trend that should translate to strong earnings throughout the year for Vale.

While Vale has had some problems with safety issues over the last few years, including a dam collapse that resulted in a $7 billion payment to settle claims, the company is taking the right steps to prevent these types of catastrophes from occurring going forward. Vale also recently reinstated its strong dividend payout and has a healthy balance sheet to support the stock's current 3.42% dividend yield. Finally, the fact that Vale reported a record Q1 adjusted EBITDA of $8.4 billion could be a sign of good things to come.

360 DigiTech Inc (NASDAQ:QFIN)

While Chinese stocks have been difficult to get a read on this year, 360 DigiTech Inc is a great growth stock to consider if you are interested in adding exposure to one of the fastest-growing economies in the world. This company operates digital consumer finance platforms that help financial institutions provide better products and services to a broader customer base. Consumers can quickly complete a simple online application and, for approximately 95% of recent credit applications, a fully automated credit decision is rendered. Borrowers that are approved on the platform can typically get access to the funds within 5 minutes, which is much quicker than the traditional lending process.

360 DigiTech recently reported strong Q1 earnings that saw the company increase its net revenue by 13.1% year-over-year to $549.3 million. Net income also grew by an astounding 452.8% year-over-year to reach $205.6 million in Q1. It's also worth mentioning that financial institutional partners used the company's platform to originate over 23 million loans, up 40.4% year-over-year, in Q1. This tells us that more and more lenders are getting on board with this company's technology-enabled lending platform. If you are interested in international names with some momentum, 360 DigiTech is a nice option to consider.

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