Overall, as an investor, a well-known portfolio diversification strategy should be positioned across various key sectors of the economy. Within a portfolio of stocks, diversification comes in the form of exposure to high-beta and low-beta stocks. Additionally, another strategy is geographical diversification. Commonly, emerging markets come to mind when talking about geographical diversification. However, I believe that there are several interesting growth stories from among Israel stocks.
In the recent past, there has also been a significant growth in the number of Israel stocks listed in the United States. Data from June 2021 shows that 85 Israeli companies traded in the US with a total market capitalization of $300 billion. The valuation accounts for 75% of Israeli gross domestic product.
With that in mind, let’s talk about four Israel stocks that are listed in the U.S. for investors to watch. My focus is on companies that have wider geographical presence and therefore, a big addressable market in their respective industries. These four companies are:
- Rada Electronic (NASDAQ:RADA)
- Playtika Holding (NASDAQ:PLTK)
- Wix.com (NASDAQ:WIX)
- Global-e Online (NASDAQ:GLBE)
Now, let’s dive in and take a closer look at each one.
Israel Stocks to Buy: Rada Electronic (RADA)
RADA stock would be my top-pick among Israel stocks. A key reason is that the company is on a high-growth trajectory. Another bullish factor is that Rada operates in the defense sector, which is relatively immune from economic shocks. As a matter of fact, defense spending has trended higher globally even during the pandemic.
Rada Electronic is in the defense equipment business with a focus on tactical radars. The company is still at an early growth stage in a market that’s worth more than $6 billion.
For 2020, Rada reported revenue of $76 million. For the current year, revenue is expected to be in excess of $120 million.
It’s also worth noting that Rada received orders worth $56 million for the first half of 2021. Year-over-year, order intake was higher by 37%. And as the backlog swells, the company is positioned for robust revenue growth and cash flow upside.
In August 2021, the company also signed a joint venture with Alpha Design Technologies in India. The country is another big defense market for the coming decade with sustained tensions in the region.
Overall, RADA stock has been in a range of consolidation in the recent past. However, the stock seems positioned to break out on the upside. And considering the addressable market for tactical radars, the company has the potential to be a long-term value creator.
Playtika Holding (PLTK)
PLTK stock was listed in January 2021 and seems like another interesting name among Israel stocks. After touching highs of $35, the stock has witnessed some correction to $26. That said, I believe that current levels are attractive for fresh exposure.
As an overview, Playtika Holding is a mobile gaming and monetization platform. For the second quarter of 2021, the company reported monthly active users of 36.1 million.
It’s worth noting that the company still derives 71% of revenue from the U.S. With growing presence in EMEA and APAC, revenue is likely to accelerate in the coming years. The company also ended the quarter with a total liquidity buffer of $1.7 billion.
The company intends to use the cash for potential merger and acquisition activities. Additionally, Playtika Holding has been investing in new games. Switch Craft is scheduled for global launch in Q4 2021. An additional casual title is planned for 2022.
For 2021, Playtika Holding has guided for revenue of $2.6 billion and adjusted EBITDA of $1 billion. The company is also positioned for annualized operating cash flow of $400 million. So as cash flows accelerate, PLTK stock is positioned to trend higher from current levels.
Israel Stocks to Buy: Wix.com (WIX)
WIX stock has been an underperformer in the last 12 months. However, the stock seems attractive at current levels for a potential reversal.
Wix is a cloud-based platform for creating websites or web-applications. The company has presence in all major markets globally. For Q2 2021, the company reported 42% of revenue from outside the United States.
Moreover, it’s worth noting that even as the stock remains depressed, the company revenue growth has been robust. For 2020, Wix reported revenue of $989 million. For the current year, the company has guided for revenue of around $1,260 million.
With sustained growth in annual recurring revenue, the company is positioned for healthy cash flows in the next few years. To put things into perspective, the company expects cash flow of $15 billion from existing cohorts over the next ten years.
Another factor to like Wix is the company’s investment in research and development. For Q2 2021, research and development expense as a percentage of collections was 23%. In terms of geographical diversification, the company reported 12% of revenue from Asia. With growing online businesses, there is ample scope for penetration in Asia and Latin America.
Overall, WIX stock is attractive with healthy growth likely to sustain. Over the long term, the company seems positioned for strong free cash flow generation.
Global-e Online (GLBE)
After listing at $25.50 in May 2021, GLBE stock has surged to current levels of $81.50. Valuations might look stretched, but the company is on a high-growth trajectory.
As an overview, Global-E Online is in the business of cross-border e-commerce. For Q2 2021, the company reported revenue growth of 92% YOY to $57.3 million. For the same period, the company’s gross margin also expanded by 360 basis points to 36%.
The company has continued to penetrate in the U.S. markets. For the recent quarter, US outbound revenues surged by 131% YOY. At the same time, the company is expanding into new geographies, which includes Asia-Pacific. This is likely to ensure that healthy top-line growth sustains.
Another potential game-changer for the company is the partnership with Shopify (NYSE:SHOP). Global-e Online is already signing-up with Shopify customers. Towards the end of the year, the company expects to complete a “deeper integration of Global-e’s offering into the Shopify platform and checkout.”
Overall, I would be slightly cautious on a big exposure to GLBE stock at current levels. However, corrections will provide a good opportunity to accumulate this high-growth company.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
More From InvestorPlace
Stock Prodigy Who Found NIO at $2… Says Buy THIS Now
Analyst Who Found Microsoft at $0.38 Names #1 Pick for the AI Boom
America’s #1 EV Stock Still Flying Under the Radar
The post 4 Promising Israel Stocks to Buy for Long-Term Value Creation appeared first on InvestorPlace.