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. And you can also rely on my colleague Christine Benz sharing 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 if 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 after a tough 2022 for stocks and bonds?

“Thanks to higher fixed-income yields and lower equity valuations, almost all of the firms in our survey have increased their expectations for stock and bond returns for the next decade,” reports Benz.

And every firm surveyed expects better returns for international stocks than for US stocks over the next decade.

For those investors who’d like to increase their exposure to global equities, here are Morningstar’s top international-stock ideas today.

10 Undervalued International Stocks

These 10 international stocks were taken from the Morningstar Global ex-US Moat Focus Index and looked undervalued as of Jan. 27, 2023.

  1. Airbus EADSY
  2. ING Groep ING
  3. Anheuser-Busch InBev BUD
  4. Bayerische Motoren Werke BMWYY
  5. Imperial Brands IMBBY
  6. WPP WPP
  7. Yum China YUMC
  8. BRP DOOO
  9. HSBC Holdings HSBC
  10. GSK GSK

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.

Learn more about our approach to stocks in Morningstar’s Guide to Stock Investing.

We think undervalued stocks with economic moats make the excellent long-term investments.

Read more about the 6 ASX stocks with wide economic moats that are poised to outperform over the long term.

The Morningstar Global 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.

How to find more international stocks for the long term

Those investors who’d like to find more international stocks to consider can review all the international stocks on the Morningstar Global ex-US Moat Focus Index’s portfolio page.

Remember, the index focuses exclusively on undervalued non-US stocks with wide or narrow economic moat ratings.

Read more: 

5 undervalued semiconductor stocks

3 great global stock ETFs