As worldwide markets are challenged in an environment of higher interest rates, conflict in the Middle East, and the lingering battle between Russia and Ukraine, one thing has not changed: U.S. stocks are more expensive than global stocks. And with the large run-up in stock prices in late 2023 and the first half of 2024, U.S. stocks are even more expensive. Consider P/E ratios. The trailing P/E ratio on the S&P 500 is 28, above the global average of 14 and well above the 6-12 average P/Es for emerging markets stocks. A review of yields tells a similar story. The current dividend yield for the S&P 500 is 1.2%, versus the global average of 2.8% and Asian, Australian and Latin American yields of 3%-6%. The foreign region that does not completely fit the pattern is the Middle East. The average P/E on a Saudi Arabian stock is a relatively high 17. This can be attributed to high oil prices. Taking a step back, one reason investors generally are willing to pay a higher price for North American securities is the transparency of the U.S. financial system as well as the liquidity of U.S. markets. What's more, global returns can be volatile across individual countries, given currency, security, political, and geopolitical risks. Indeed, U.S. stocks (ETF SPY) have outperformed EAFE (ETF EFA) over the past year as well as over the past five years. Even so, we recommend that growth investors have approximately 5%-10% of their equity allocations in international stocks to take advantage of the value, and we have been adding global stocks to our Universe of Coverage.

In this edition, playing the long game on commercial turbine engines; making the case for integrated oils despite the headlines; watching where Prudential tilts; and Nike, Novo Nordisk, and Zhejiang Supor.

With roughly one third of the global branded diabetes treatment market, Novo Nordisk is the leading provider of diabetes-care products in the world. Based in Denmark, the company manufactures and markets a variety of human and modern insulins, injectable diabetes treatments such as GLP-1 therapy, oral antidiabetic agents, and obesity treatments. Novo also has a biopharmaceutical segment (constituting roughly 10% of revenue) that specializes in protein therapies for hemophilia and other disorders.

With roughly one third of the global branded diabetes treatment market, Novo Nordisk is the leading provider of diabetes-care products in the world. Based in Denmark, the company manufactures and markets a variety of human and modern insulins, injectable diabetes treatments such as GLP-1 therapy, oral antidiabetic agents, and obesity treatments. Novo also has a biopharmaceutical segment (constituting roughly 10% of revenue) that specializes in protein therapies for hemophilia and other disorders.