Chit Chat Stocks - Our Top 5 International Stocks for 2026

Episode Date: November 26, 2025

*****Apologies for some scratchy audio from Brett's mic on this episode***** On this episode of Chit Chat Stocks, we dive into five international stocks (outside of the United States) on our radar for 2026. We discuss: (00:00) Introduction (03:22) Honorable Mentions and Market Insights (03:52) Grupo Aeroportuario del Sur: A Case Study (15:38) Grab Holdings: The Super App of Southeast Asia (30:33) Hermes International: The Luxury Brand with Heritage (39:54) Exploring the Digital Remittance Landscape (41:37) Wise: A Game Changer in Money Transfers (46:07) The Business Model of Wise (50:51) Investing in Bolsa Mexicana de Valores (57:05) Comparing Stock Exchanges: Mexico vs. the U.S. (01:02:09) Final Thoughts and Stock Picks ***************************************************** Sign up for our stock research service, Emerging Moats: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Portseido is your best portfolio tracking & reporting solution that helps you track all investments in one place. We personally use the software to track our portfolio returns across brokerage accounts. Try it for free today: https://portseido.com/?fpr=ryan63  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Stocks. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chit Chat Stocks is a CCM Media Group podcast. Anything discussed on Chit Chat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. welcome to chit chat stocks a podcast that helps you discover your next great investment today we are talking about our top five international stocks for 2026 i'm one of your hosts ryan henderson and i'm joined as always by brett schaefer when i say top stocks for 2026 top international stocks we are referring to companies that primarily do business outside the united

States. So Brett and I are both based in the US. So when we say international, it's anything outside of that. And then for 2026, it's stocks at the top of our buy list going into the 2026 calendar year, not stocks we think will specifically do well just in that year. So I'll leave it there. Brett, are you ready for today's discussion? What were, I guess, maybe we can start with some honorable mentions who were close to heading to this list that didn't follow the rules exactly because its largest revenue country is the united states and that is nintendo so i'm not going to put that one on the list even though that's one that i do own i was excited to talk about these type of companies because i think in general larger

companies in the united states are trading at premium valuations and there's a lot of opportunities to look at potentially high quality businesses in Latin America, Asia, Europe, what have you that can be trading at cheaper prices. And I wanted to look at these. These are not ones that I actually, none of these stocks I own today. I have owned one of them in the past. I could definitely see myself buying these companies at the right price in 2026. It doesn't mean I will, but I think these are good companies, interesting companies, at least to keep on your watch list and fascinating businesses to study because I think all three have wide moat characteristics. Now, before we get into our number one stock,

and it's not ranked one through five or anything like that, they're equally ranked here. But before we do, I want to give a shout out to Fiscal.ai. It is the Black Friday sale by the time this goes live. So the Black Friday sale is 30% off all paid plans. You know how much we use it here on Chitchat Stocks. I think we used it for every single company on this list when we were researching the companies. It's 30% off all paid plans. Typically, our affiliate discount is just 15% and that ends December 1st. So if you've thought about getting in, now is a great time to do it. It's the largest discount Fiscal.ai has ever run. So 30% off all paid plans now until december 1st at 11 59 eastern time so midnight monday december 1st with that brett anything to

add there or should we get into the first company oh so the last thing to add to make sure you are supporting the show you is our discount link fiscal.ai slash chit chat that link will be directly in the show notes make you just make sure to sign up using that link to get the discount It's not going to change the exact discount, but it'll help us with our advertising partner. All right. I think we can get right into it. My first stock, and this is, again, in no particular order. We're just going one through five.

It is, unsurprisingly, for longtime listeners here, Grupo Aeroportario del Suroeste. My Spanish accent is not very great. We're going to call it the Southern Airport Operator of Mexico. It's not one that I actually own. I own a different operator that I wanted to just talk about a different company here today, which is the Northern Airport Operator. But this is a company that has benefited greatly from the tourist boom to Cancun over the last two decades. It has really been known as the Cancun Airport Operator, but it has recently made a transformative acquisition to make it less reliant on the,

what we might call potentially oversaturated tourist hub. What do you think about that take, Ryan, has Cancun gone through a multi-decade growth tail when it has it peaked? Because if you look at the traffic numbers, it's quite staggering how many people visit that area every year. Yeah, I haven't been in a while, but if you have been, maybe you have better boots on the ground. Tell us how that airport is. Tell us if the city feels a little too packed. My guess is that people are still loving Cancun, and that probably hasn't changed. Right.

Right. But I guess the thing is, and what has concerned investors is Cancun has been a huge growth driver from basically nothing to millions and millions of traffic, you know, through that airport each year. And is it going to keep growing at that rate? Maybe there could be a debate to be had there. But if you look at our friends at Fiscal AI, Grupo, Suroeste, or the Southern Airport operator has produced a 20% annual total return since going public in 2000. So close to 25 years, 20% total returns. That is knocking on the door of being a hundred beggar. Clearly, it is a good business. I think, or at least it has been a good business for shareholders over the last 25 years. Now we can discuss what makes the airport operators an interesting model

and why it's interesting for outside shareholders to benefit from. As people, and I'll keep this brief because we've discussed this plenty of times on the podcast, and I've written about it on the newsletter plenty of times as well. But the airport operators do not own the airports in Mexico, but they have a contract to manage them. And the land is owned either by, you know, the Mexican government, something like that. And they have these long term multi-decade contracts to manage the airport, invest in the airports. Okay, well, is traffic going to grow in this place? We're going to build a new terminal. We're going to plan all this stuff out here. And the government will give them concessions to do that. And every

time a airline or a plane docks at its gate, and every time it leaves, I forget exactly which one they charged either leaving or arriving. But it doesn't really matter which one they're technically charging for. They get a fee. So they have a fee basically per passenger on the plane. And they also make money from commercial revenue in the airports, which is duty-free shops, restaurants, VIP lounges, parking, what have you. And what's great about airports and why I like them and why we're studying next week, Chris Hone, a famous investor, he seems to like them as well. And I think a lot of investors do like these type of companies is their natural monopolies. You're going to have one airport in your city, maybe multiple, but building another airport is going

to be difficult, no matter how well or badly it's operated, no matter how great or bad the management team is, it's going to generate profits year after year after year. And the airline industry grows or air traffic grows globally, at least it has for the last 50 to 100 years, pretty much indefinitely, except for some short periods there. And the profits of the airlines aren't really that great. That's a famous example of just a hyper competitive industry that doesn't necessarily bring a lot of value for shareholders. But airports are the opposite. I think it's because of this competitive advantage of the single infrastructure asset, it's not going to be replicated in your city and the regulatory moat that you have there.

So with that being said, today, the Southern Airport Operator, ticker is SUR for people that are interested, the stock is in a 19% drawdown and it's actually trading at an EV to EBITDA, which I think is a fine multiple for an airport operator of nine. Now, why is this happening? Because Cancun traffic has stagnated in 2025. Total traffic to Cancun, which is about half or just under half of company traffic today, is down 4% year over year through the first nine months of 2025. All the other airports they own, Puerto Rico, up 5%. Colombia traffic is up 3.4%. So tourism hasn't died. But Cancun is either, as people are worried about, peaking or going through a rough patch with travelers searching for other options. This is going to present a headwind of

traffic growth at Cancun if that continues, and is likely why the stock is traded down to below nine times, even though it has been a gem of an asset to own over the last 25 years. I think there are a few things that can mitigate these concerns. First, First, there are inflation-adjusted, for all intents and purposes, given the contracts they have, passenger traffic revenue. Second is commercial revenue per passenger, which has grown at 8.8% year-to-date compared to underlying passenger traffic that is flat. I think these are dynamics that can continue over the next decade. It's kind of one of the beautiful things about the airport operators is even if your traffic is flat, There are generally in Mexico dynamics with their contracts that allow them to keep growing

revenue, especially commercial revenue, as long as they can execute and getting enough commercial stuff within their airports. Now, the one thing in here, and maybe I'll let Ryan add in anything here before we get to the merger, is this acquisition. They just had a purchase price of $936 million in cash or $2.56 billion in adding on debt for a true enterprise value of what is called these Motiva airports, other Latin American airports. But Ryan, before we get into that acquisition and how that changes, what do you think about the existing legacy Southern Airports business company? Yeah, for regular listeners,

you know that we generally like the airport business model. Like you said, very much local monopolies. Even if you wanted to stand up a new airport in most of these cities, it would be very hard to get regulatory approval. There's all these massive hurdles to doing so. So the major airports in those cities tend to be monopolies. I like the business model. I like the economics of it. I don't worry too much about the lease versus own structure that people seem to really worry about and then i also like mexico even if you think like cancun's traffic growth flatlining to me when i look out 10 years do i think more people or less people will be traveling to cancun my gut says more people maybe i'd be a little less optimistic i'd say i'd say my gut say would

be least flat but you there's one thing i i didn't write down in our numbers here that I mean, you may not know about, but Tulum now has its own airport, which could steal some traffic. So there are some potential headwinds that I didn't mention that could affect that. Yeah, and it accounts for what, half of volume at the moment? Right, just under half. And that's a good segue as we're going to be almost doubling their existing traffic with this acquisition for $2.56 billion. I'll go through what they're acquiring. It's essentially equity interest in 20 different airports in Brazil, Ecuador, Costa Rica, and

Curaçao. You have the Quito, the biggest city in Ecuador's airport. You have the San Jose airport in Costa Rica, their largest airport, the Curaçao International airport, and then a variety of different airports in Brazil. I forget the one that's sizable, but generally, this isn't Rio or Sao Paulo or something like that. These are smaller airports. These airports generate $243 million in EBITDA when considering Motiva's ownership.

And that compares to about $1.1 billion over the last 12 months for the group, the Southern Airport Operator. This group does about 45 million passengers all outside of Mexico, but still in Latin America. And the Southern Airport Operator did around 71 million passengers over the last 12 months. So we have 71 million, you have 45 million. that's more than half of their existing ones. They're not doubling their traffic, but what is that? Just over 50%. And I think depending on how the deal shakes out, it looks like they are

acquiring these assets at about 10 times EBITDA, give or take. However, they may be able to refind some of the debt and make it less costly. They could increase revenue per passenger at some of these airports by, for example, adding on better commercial opportunities, just using their playbook that they've applied to Puerto Rico, the Mexican airports, the Colombian airports. I think cash flows may be able to grow significantly if efficiencies can be made, because look at these arenas. Again, there's a difference between domestic and international passengers. There's a difference between a passenger that's going to somewhere in the United States versus like a inter-Columbian route or something like that, just because

what you can charge versus the incomes in these regions. But if you look at their passenger levels, 45 million, and then EBITDA, 243 million versus 1.1 billion for the Southern airport operator at 71 million passengers, it seems like there's a disparity there that can kind of close that gap. And there might be a lot of room for efficiencies to be made. I like the San Jose airport a lot. That seems like a very stable place. You have U.S. tourism that continues to grow to Costa Rica. Quito, they may be buying on the dip a bit just because Ecuador's had a lot of safety issues. It's one of the most dangerous places in Latin America at the moment. Curacao, not so much i don't know it seems like a fine place to own an airport will be stable and brazil

yeah you know it'll be okay these aren't any game-changing airports these aren't like amazing assets like a guadalajara or a you know a bogota or something like that that are kind of these hubs or a panama city but if we look at that i think all in all they're able to deploy a lot of capital here at a very reasonable price. They can de-risk from Cancun and they can still pump out healthy dividends to shareholders each year. Feels like a very interesting opportunity here. And I will flag and give a shout out to who I like to call jokingly because he doesn't just cover Latin American stocks. Ian Bezek from Ian's Insider Corner, who just came on the show to discuss different Latin American stocks

in the Argentina, Chile, and Colombia and political situations. He did a lot of good research on this company and the merger. So I looked at that in his premium newsletter. So go check him out for the true expert on this stock. But I think it's interesting. Ryan, any final thoughts

before we move on to your first one? I think when people look at international stocks and especially stocks in Mexico, there's this tendency to think that like we're reinventing the wheel here and that we are looking for returns where they haven't been brett mentioned it the the total returns over the last 20 years but to just illustrate it a little more this is a good this is a great business and it has been a great business for a long time ten thousand dollar investment in del sereste the uh southern it's hard to say isn't it with the american accent yeah ten thousand dollar investment

20 years ago would be worth just under a million dollars today 819k so 80 bagger over 20 years that's phenomenal returns i don't see why there would be a massive change well sorry i shouldn't say that i'm not expecting i don't think brett's underwriting an 80 bagger here but there shouldn't be a structural change in the business model moving forward. Maybe Cancun doesn't grow quite as quick, but like you said, it's after this acquisition, it's going to be about a quarter of volume. So it's becoming less and less essential to the thesis. Right. It's not going to be as high growth. I would not expect that, but I still think it is quite the wide moat business. So by your first stock, Ryan, Grab Holdings, a company that I really don't know much about,

Well, besides what you've talked about on the podcast and written on in the newsletter. Take us through Grab Holdings. Why do you think it's interesting here and how has the business developed? Because I think you did a full research report on them back in the summer. If you're a regular listener to Chit Chat Stocks, then you know that we love investing in international stocks. And no brokerage compares to interactive brokers, otherwise known as IBKR, when it comes to international trading. You can easily trade assets worldwide using a multi-currency IBKR account in 160 markets, 36 countries, and 28 currencies with low fees.

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Yeah, the stock hasn't moved a whole lot since I did the report. So a lot of that is still very much intact. There's one big development that I think could be sort of a thesis changer here but for anyone that doesn't know grab is considered a super app in southeast asia and that means basically you can get ride hand like ride sharing services uber think of it that way but there's also a lot of bikes down there as well that's a common mode of transportation there's food or grocery delivery and then they even have financial services so think like e-wallet you can pay with your grab app grab pay you can either pay for grab services or you can go to like a third-party merchant, go to the grocery store, whatever, pay with GrabPay, and then you

earn rewards into your Grab wallet, which if you're a regular user could be a pretty compelling upsell. But it's important to understand that this is not just like great marketing by Grab being a quote-unquote super app. They very much are a household name across pretty much all of Southeast Asia. So within the mobility segment specifically, and that is ride-sharing, think of as the uber they've got 97 market share in malaysia 91 in the philippines 85 in thailand 67 in vietnam the only notable market where it's still very competitive is indonesia and it's about a 50 50 market share split there now indonesia is the largest market in southeast asia so it's a big one but they split that with gojek so the parent company is go to but gojek is probably

another one anyone that's traveled to indonesia you'll i assume you've probably seen that brand but yeah that's kind of the basics this is a super app a lot of delivery a lot of mobility services that's kind of the bread and butter and then they're layering on these financial services as well which does it introduces some risk to the business that existing investors or tech analysts might not love being added because it is outside their circle of competence or whatever. And it obviously brings credit risk. So there's some small microloan lending segment in there as well. But in general, I like the Grab business for a few reasons. So number one, network effect. The more drivers that are on your service, the more supply. The more supply

equals cheaper rides. Cheaper rides drives more customers, more customers drives more drivers. So very much this positive feedback loop between the driver side and the rider side. We've seen this play out very clearly in the US in the market with Uber. And we've even seen it play out clearly in Southeast Asia with Grab. If you look at the monthly riders quarter after quarter, which Fiscal AI does report, it continues to grow for Grab. The second thing I'd like here is once you're the leader, you're pretty hard to replace. So for example, Uber ended up exiting all these Southeast Asian markets eventually because partly because they were hemorrhaging money, but they were not gaining share against Grab. So they were pouring money into user

acquisition in Southeast Asia and they weren't able to steal share from Grab. So eventually they folded. Grab ate a lot of that market share. And now Grab really is sort of the primary player in most of their markets other than indonesia one other one slightly i don't know if this is like something i like about the business but when it comes to uber in america a lot of people think about the self-driving risk of disruption i think that's a long ways away in some of these southeast asian markets there i mean a we're just not seeing i haven't seen quite as much news around it but it's also a much tougher problem to solve when you think about the population density in some of these cities, along with how people drive. It's a lot of bikes. It's a lot of pedestrians.

You're kind of weaving. It's not quite the same infrastructure as you see in the United States. And then the last thing that I really like about this business is that there are some natural next step type markets. So we've seen this with Uber and Uber Eats. We've seen this with grab now delivery grocery and uh food delivery but it's very easy to kind of move into an adjacent market like that and they've done that very successfully deliveries now accounts for more revenue than mobility for grab albeit it's a lower margin business but it's it's a bigger on the top line so i like where grabs at i think it's a very i would be very surprised if they did not have more drivers and riders in five years i i would bet on that for sure that's going to happen

i think but the other part and what kind of gets me excited here is they're the largest competitor i mentioned gojek they are rumored to be acquiring them so these rumors have been going on for a while, but nothing has really come of it. And then over the last couple of months, these rumors have sort of started to back up again. So a little bit of background here, Gojek also heavily VC funded like Grab. I think they might've both been soft bank portfolio companies. They both had big splash IPOs and then they had years of operating losses. Grab has gotten to profitability now, gap profitability, whereas Gojek is still losing money, but it's also gone in the right direction. Grab is about three times larger on a revenue basis, and there seems to be more and more mounting pressure for the two companies to merge. So I was looking at the news, and here's a quote from The Diplomat, which I believe is popular in Korea, if I'm not mistaken.

Maybe I could be getting that market wrong, but I thought I saw that one. I can't help you on that one. Yeah. Anyway, so here's a quote. It says, one reason the deal has gained traction again after months of dormancy is that reports surfaced that Indonesian state-owned investment fund, Donantara, would possibly be involved, perhaps by holding a golden share conferring special voting rights. I wrote a few months ago that a major obstacle to any such merger is that the Indonesian

government would resist majority foreign ownership of Gotu. The involvement of Donantara in the shareholder structure of a merged Gotu grab entity would address this. Some of GoTo's major shareholders are pushing for CEO Patrick Lujo to be replaced, which would presumably help clear the way for a deal to go through. The CEO has now stepped down, and the COO is taking over, so it seems more and more likely. If this deal does happen, Grab will be an unencumbered monopoly in Southeast Asia. They will have the majority market share, vast majority market share in, I believe, what accounts for like 90% of the Southeast Asian population. So I like the position they are already in.

I think it'd be even better if they had the go-to merger. Obviously, price dependent. You don't want them to just pay anything. But there's a lot when it comes to evaluating grabs financials. I went through that in a full episode. you can go back and listen if you want. My estimates get grabbed to around $2 billion in EBITDA by 2030. That could be high, but they have an enterprise value of about $16.5 billion today. So call it eight times 2030 EBITDA. I like the CEO, Anthony Tan. He seems honest.

He's hardworking. Sometimes a barrier for me is that I can't understand the CEO or whatever. I'm not able to get a full grasp on how he communicates with shareholders. Anthony Tan speaks great English. I think he went to Harvard, I believe is where he actually founded the business, was when he was in Harvard Business School. The stock is not dirt cheap by any means, but I think they're in a very good position to grow. I'll talk about this in my next talk too, But I look for – I try to basically with any investment when I'm researching stocks, I want five-year-out earnings. I want the market cap or EV to be less than 10 times my estimate of five-year-out earnings, assuming that it's a good business. If it's like just a value play or whatever, I want it to be a little cheaper than that.

but less than 10 times five year out earnings and if you get that the reason i like it is like i could be wrong with grab they could generate far less evida and i'd probably lose money in that scenario like if it grew at half the rate i'm projecting i'd probably lose money but if i'm right you probably get a little bit of multiple expansion expansion potentially and you make more than double your money it could be obviously a multi-bagger so i like the returns the return potential when it's that kind of setup and it seems like grabs sort of right in that wheelhouse do you own any today no top of my watch list for well it's for 2026 brett that's true i guess all right when the calendar strikes january 1st you can buy i like this chart that you showed

here too. They were, when they IPO'd, a heavy loser of just operating earnings, especially as a percentage of their revenue. I think it was over double their revenue from the last 12-month period. And now it's flipped over the last 12 months to positive operating earnings and it steadily moved up and to the right. So now they're in a much healthier financial position and they can probably become much more aggressive when it comes to that acquisition or even trying to just put their pedal down and gain more market share of, you know, they already have a vast majority of market share of ride sharing, but just outside of the core rides business, they can subsidize delivery, stuff like that, and try to build the super app and do so without

worrying about any liquidity. Yeah, they seem to be in a good spot. I think when Uber was successful in the States, you saw a lot of copycats in Southeast Asia and a lot of them were heavily vc backed probably grabbed the most i think what you see in terms of the operating margins in 2022 is what you could call the soft bank effect where you run at negative 200 operating margins because you have a ton of cash from masa sun and soft bank the yeah now there's not nearly as much competition a lot of the sub-scale players have gone bankrupt or been acquired or whatever and now you pretty much have grab as the dominant market share

provider and as long as drivers and riders continues to grow on the platform those two two core drivers i keep using the term drivers but mobility and deliveries those two business segments should continue to grow financial services i kind of shrug my shoulders i'm not sure what's going to happen there i hope they don't hemorrhage money in it but a bunch of loans that are opaque yeah that would add some risk to the business for sure it seems like a good interesting investment um i guess let's move move on so we don't go too long on this episode let's get my second stock it's one we haven't discussed recently but one we studied a lot i believe in 2023 or maybe late 2022 it's been a while but it's a high quality business it's aramez international

or simply Hermes. I'm a believer that Hermes is one of the best businesses in the world, has a wide moat for, you know, you might ask why, why them over Prada, Gucci, what have you? Like, oh, okay. You know, can't, isn't there just a ton of luxury companies out there? I think one, they have a long enough heritage, multiple, I think centuries at this point, if not close to 200 years to be durable in the mind of the luxury consumer. And they even have more and more growing lore, history, all the stuff that makes up the mystique of things like the Birkin bags and stuff like that that's more modern. They are run by people who understand proper luxury branding. They understand proper luxury heritage, and they have a vision for durability

instead of the concerns and the things that have happened with some of the other luxury brands in Europe of boosting short-term earnings, flooding the market with products, and reducing that brand cachet, which has happened to a prime example, Gucci. And third, they have sustained pricing power because of a limited supply, consistent limited supply, and then the pricing at retail being under aftermarket prices. Because if the aftermarket price is double the price of your retail price, well, then that means you have the room to double the price of your retail price without impacting demand over a multi-decade period. The company has grown in 2025, despite continued slowdown across the broader fashion and luxury space. Here's a quote from the recent

report. Sales grew 9% at a constant exchange rate compared to the year earlier period, accelerating from a 7.2% increase it recorded in the first quarter. Demand for luxury goods has weakened recently after a post-pandemic spending boom, particularly among less affluent shoppers who closed their wallets in light of the difficult economic landscape. Essentially, what they're saying is the post-pandemic boom is over, but it's okay because we only cater to the people that the economy doesn't matter to, the ultra rich. Sales in the third quarter grew at 10% year over year, constant exchange rates. And this is at a time when they are still getting dragged down by slow China growth. So if you look at Japan, Europe, and the Americas, they're all

growing faster than 10% year over year. We're seeing consistent 40% plus profit margins. And today, shares traded an EV to EBIT of 33. It's come down a little bit. My question is, is this cheap? I'll go first and let maybe Ryan give some analysis here too. I think investors do fine here owning Hermes, probably nothing spectacular. I would be looking to buy below 25 times earnings, maybe even lower, which has occurred historically. If you look at these charts, I mean, just go back, right, it's a chart going, I think, a little 10 years, maybe a little bit longer there. There's been plenty of opportunities to buy Hermes at a lower price. And this is a business, if you buy right, given the sustained pricing power, I think it's one you can buy and hold

forever. And I'd really like to get in at a greedy price. Here's a quote from, I believe, the Wall Street Journal that illustrates exactly what is happening with the fake luxury brands versus the true luxury brands like Hermes. Quote, a number of luxury companies, including Hermes, already had adjusted prices to offset the impact of the levies. The French group was considered one of the companies with the most room to maneuver as it is exposed to more affluent buyers who continue to splurge money on luxuries. Other brands that target a less affluent clientele could encounter greater difficulties in pushing up prices as hikes in recent years have put off some shoppers. And I'll close here with something that it takes time to learn as an

investor, which is just simplify things. And if the stock has gone up a ton, it's probably a good business. Since 1994, Hermes has taggered at an 18% annual return that is 30 years, over 30 years at this point. And it has returned 56,000% to shareholders. That is over a hundred beggar, right? Almost a thousand beggar. I think it's going to be a thousand beggar at some point. This is a great business. It's one you want to keep on the watch list. It's one I think you want to own at a reasonable price. This episode is presented by our favorite portfolio tracking tool, PortSido. Do you know what your actual investment returns are? Well, if you're like me, then the answer is

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And for the first time ever, Port Saito is running a platform-wide discount to celebrate Black Friday. From November 26th to December 1st, you can get up to 40% off. That means you would get three months of Port Saito Pro for just $27. Again, that is portsaito.com. the link will be in our show notes yeah they have one of those i like when companies have really good heritage it's like ferrari in that sense because 200 years of being a premium brand and having and being known as luxury for that long is very you can't be it can't be replicated

by a startup you cannot replicate 200 years of heritage with vc money right you can't just beat up time like that yeah that is a good point that's a good point and it's like remember the what's the buffett thing where it's like if you gave me 10 billion dollars could i replicate it no you can't replicate hermes with 10 billion dollars even you know give it to the best entrepreneur yeah if you look at the revenue per store uh now people have probably heard some of the stories of hermes stores people going in and not being allowed to be a customer which i think is funny that people get out you can only buy it you had to start out with something like a scarf and then probably a 300 scarf and then you can level up almost like a game they do really

incentivize their customers quite well if they have large wallets yeah so in 2013 the average hermes store was doing about 12 million dollars in sales i think this is in euros but i'm not sure where the giver translation is at right now 12 million dollars in euros per hermes store a decade ago last year they were doing 52 million dollars per store i guarantee i would bet 85 maybe 80 percent of that growth has come from price growth not them selling more items because they're not they do generally try to restrict supply if they just went the gucci style and just gave everything away and had a bunch of fakes whatever it would have deteriorated the brand that is the beauty of pricing power and you can just picture the operating leverage there and they haven't gone

cheap they are true luxury they have french artisan handcrafted bags that are literally handcrafted they're not manufactured in a low-cost labor market so yeah i think they do a really good job ev to ebit at 32 i would wait i'm probably the same as you but this should be if you like quality long-term easy to sleep at night type investments this should be at the top of your watch list heading into the new year did you hear about the scandal with the family member uh and his financial advisor for the air mass family member no i have not so there was a long i mean it's like sixth seventh generation down the line now uh this person i think has no impact on running the business but they were a family member that owns stock and it given how hermes

has performed in the last two decades he was supposed to have a stake worth like 15 billion dollars but it turns out his financial advisor stole his or sold his shares unwillingly stole the money and he has nothing well that's horrendous for him yeah that's terrible i assume the advisor is in prison or something i think he's being invested it's a whole swiss french thing it's it's it's like uh it's like a movie it's pretty cool but apparently he was seen yeah flying coach which is a tough tough thing you know hold on to your winners don't let your financial advisor uh steal stuff yeah it's a whole complicated story we don't have to get into here but let's get to your second stock ryan wise company i know you own and one that

would you call it a battleground stock or maybe one that's misunderstood by investors how would you clarify this where do you see the opportunity with this business yeah it seems like maybe digital remittances broadly seem to be battleground area there's the valuations have just soured on a lot of these companies i own two digital remittance companies wise and remittly and investor sentiment is certainly worse than it was a few years ago for both these companies but stable coins ryan it's coming they're they're gonna kill them both it seems unlikely uh but we shall see i guess as soon as someone solves the off-ramping issue it's possible but that we're yet to see that happen yet so wise this is a service i use all

the time it's one of two companies that i already own like i mentioned they are based in london let me double check that i didn't break my rule here and that they don't have majority of their revenue in the united states i feel like if you include europe as one region that's probably higher yeah the majority of vault north america is not their highest revenue geography so that's I'm good. Okay. I'll let it pass. All right.

Shout out to Fiscal AI for the quick numbers there. But WISE is – it's basically a platform app slash website that gives users a multi-currency account where they can hold, receive, send, or spend money. I know that was kind of – sounded a little promotional, but that's literally what it is. And they're fundamentally a bit different than other remittance providers. So instead of working with partner banks or sort of being a correspondent banking wrapper where a lot of these – there are some online remittance providers that are – they send money through the correspondent banking system, but then they layer on a nice user interface, user experience where you're still charging high fees, but it seems a little more seamless than doing a traditional bank wire transfer. wise they set up local banking licenses in various countries so that it can just adjust the balances in their different uh bank accounts within those countries as opposed to actually sending the money across borders so it might be a i hope everyone followed that but basically

just picture wise has a u.s account wise has a account in thailand someone wants to send money from the US to Thailand, it will deduct money in the Wise US bank, add money in the Wise Thai bank, send it to the Wise recipient in that case. This direct banking model enables Wise to charge much lower rates than other remittance platforms. And that is exactly what they do. So Wise is actively trying to be the lowest cost remittance provider globally, and this shows up in their If you look at the – once again, Fiscal.ai has the cross-border take rate, which Wise reports every quarter. In June of 2020, it was three-quarters of 1%, so 0.75%. Today, it's 0.52%. This is not competition bringing price down. This is them driving their own prices down intentionally. So this global direct banking system is what I'm referring to when I say digital infrastructure. So when I say – I've said this before on other podcasts where it's like Wise has a really strong digital infrastructure and that provides them an advantage.

It's that global direct banking system, that network of banking licenses. And it's not super easy to replicate. At least I haven't seen it replicated yet. from what i hear it takes quite a long time to acquire banking licenses in most countries and then it often requires like a strong track record probably means currying favor with some government sometimes or whatever you know building those relationships over many years and being the low-cost provider as most people would imagine has helped wise attract more and more volume and more volume means they can invest more in their digital infrastructure they can invest more in

marketing, kind of reinforce their growth. When we look at volume over the last five years, they have gone from $13 billion in total send volume to 44 billion. And I'm looking at the Q3 numbers here. So their quarterly send volume five years ago was 13 billion. Today, it's 44. Well, there's been growth from the personal side. So just people like me sending money across borders but also particular strength in the business customer segment so more and more business customers are using wise to send money across borders we're seeing that both in their customer count so they report business customers which has grown really quickly and then the business customers are also sending more uh which is it's a more attractive customer base because

it's stickier higher volume higher uh ticket sends anyways that's the digital infrastructure A lot of tailwinds in the business. Being a low-cost provider, it attracts more money. And then they've used that infrastructure to build out sort of four revenue generating methods. So there's transfers that still accounts for about half of their revenue. The wise card accounts about 25% of revenue and then interest on deposits and the wise platform. When I say interest on deposits, it's exactly what it sounds like. You can store your money unwise and it's like a high yield cash account and then they just take a tiny spread and the wise platform is it's growing it's a growing part of the business but they're basically just

licensing their digital infrastructure to banks so banks can send money cheaper or other fintechs can send money cheaper across borders for their customers the accounting's a little tricky i mean I kind of, maybe I'll pause there, Brett, but does that lay groundwork for understanding why the business has been successful so far? Sure. Yeah, I think so. I think that's a good summary of the wise business. I should mention for anyone that is curious of what the wise platform is, they did sign a long-term partnership with NewBank. So this isn't small players out there. NewBank has a hundred million customers in Latin America and using wise, They can now let people send money across borders or maybe that's something they're building.

And they do this with all sorts of banks around the world. But I think it makes sense. Maybe anecdotally, we use wise. Unfortunately, their interest rate on deposits has declined along with the Federal Reserve declining their interest rate. That's just kind of the product out there. But I'm pretty happy with it. I would like them to maybe innovate more and add more business solutions because sometimes we get a bit frustrated on not having that robust of a product set out there, but still early days for their business solutions. And if that's the only gripe, it feels like a good business.

All right. Yeah. Ryan, go ahead. Yeah, it's validation that their digital infrastructure is better than what's out there. So when you see these new banks, and I'm saying N-E-W banks and new bank in this case, when you see them signing up and latching on to the wise infrastructure and using that to send money across borders, it's basically them saying, yeah, you are offering the lowest cost transfer solutions and we want to give that to our customers as well. With the accounting, it can be a little tricky because the interest income and expensing process is a little messy. They have like a weird 1% threshold after the fact revenue recognition thing, and it's wonky. But the number to pay attention to is what they call underlying profit before taxes.

And that equates fairly well to underlying free cash flow also. Last year, they earned 282 million pounds, British pounds, in underlying profit before taxes. This year is going to be lower, partly due to lower rates. So they're going to see lower interest income. But then it's, quote unquote, an increased investment period from the company. So underlying profit before taxes, UPBT for short, is expected to come in around 260 to 270 million pounds. slightly lower than last year but they've given out sort of long-term guidance figures and they they expect over the quote medium term i don't know what exactly that means but i would

guess three to five years they're guiding for 15 to 20 annual revenue growth and 13 to 16 upbt taxes or not taxes uh margins so if they hit those figures over the next five years which i I personally think is conservative, especially on the margin side. Revenue, I think they can beat it, but we'll see. They should be around 500 to 600 million pounds in 2030 earnings. It's an enterprise value of about seven and a half billion pounds today. So EV to five-year-out earnings doesn't quite meet my threshold that I'm looking for. It's at 12 times instead of the sub 10 times that I typically want. But I think that's reasonable. It is a very high quality business. You're seeing the validation of that in the wise platform.

Like we've said, it's not easy to replicate the digital infrastructure. And once again, if I'm right and you get 25% revenue growth and 20% margins, you're getting a much better return. earned. If I'm wrong, yeah, I'll probably lose a little bit of money. But if I can find a company where it trades at less than 10 times five-year-out earnings, I think it's a high-quality business and it's got honest management with skin in the game. And Carmen, Christo Carmen, the CEO owns 18% of the shares. I tend to just end up becoming a shareholder. I think they're in a good spot and it's close enough to meeting those hurdles that I'm very happy to continue owning it. I don't know if I'd necessarily be buying new right away, but below sort of a 15%

drawdown here, I would probably add shares. So to sum things up, you're a buyer on the dip. All right, let's get the last stock here. It's another one in Mexico. Unsurprisingly, I do like some of these cheap Latin American names out there. It's Bolsa Mexicana de Valores, or just the largest stock exchange in Mexico with, as you mentioned, close to a monopoly, about 80% market share of all trades. And they also have some other assets relevant to the exchange business, similar to something like the New York Stock Exchange or something like that. I did a long form podcast and write up on the stock back around a year ago. So people can go get a full history of the business and the whole business model for a full hour.

actually almost exactly a year ago. At this point, it was in the low 30s. I then sold earlier this year when it was up into the 40s. Now it's back down to $34.50 as of this recording. So it could be a good opportunity to begin. It currently has an earnings yield of 8.5%. So talk about starting earnings yield at close to 10 times earnings. We have a given Ryan's metric of kind of a three to five-year outlook to 10 times earnings, not a high hurdle to get there. And they have a dividend yielding just over 6%. If we look at Bolsa, which I might just call them that, they make money through equity trading, derivatives trading, capital formation, which is, you know, listings for either stocks or bonds or REITs or what have you, central depository services and selling

pricing and market data to third parties. If we look at revenue, it was up 10% year over year in pesos last quarter, but growth slow, excuse me, revenue is growing. I think this year, 10% year over year, but growth slowed down in the third quarter. The company's EBIT margin is declining because it's going through a multi-year process to update its systems to modern cloud technology. They're partnering with the NASDAQ in some cases in this, uh, they're all sorts of, you know, and this is what, if you read the conference calls, pretty much anyone talks about quote unquote, mark modernizing initiatives, such as debt clearing Stuff like that.

We don't need to bore the listeners with all the intricate details here, but they're moving to the cloud. They're trying to make their systems more modern. They're trying to connect better with other exchanges out there, make it better for their core customers. And this is costing money. They're doing increased capital expenditures, stuff like that. There's just going to be some 2025, 2026, 2027 one-time increases in expenses that should

level out, but hopefully get a good return on that investment. And if we looked about that, or if we just look at the business as a whole and kind of ignore that and say, okay, they're going to do this, it's smart, but they're going to normalize over the long term, the business is doing really, really well. When the New Mexican Stock Exchange competitor debuted, Bolsa was worried about losing market share, and they actually asked regulators for the flexibility to lower prices because of this new competitor, but they have not lost market share and therefore they have not had to lower prices, which I think is a nice moat test for the business. If we look at listings in Mexico, I guess I have a screenshot for the

earnings release, but it'll be really hard to see on the share video. But if you look at that, listings are down. There wasn't even any new listings for stocks last quarter. that has been a drag on revenue however that is changing they just had i forget what it was i think it's aero mexico and some other ones that are either formally announced or in the process of getting ready to file to list on the mexican stock exchange so we're seeing with that bull market in mexico more stocks that are going to be listed um and if we look at the debt offerings it's doing quite well um short-term medium-term debt there's more that is getting listed each quarter on the exchange. And this is important because you don't only get the listings revenue,

but you also get the maintenance fee revenue that is a durable recurring revenue stream year after year after year when a company is listing on the exchange. And then it leads to more equity trading derivatives, revenue, stuff like that, because the more stocks that are available on the exchange, the more people are going to trade. You get those economies of scale and reinforcing effects. I think the company is rational with regards to its dividend buybacks and CapEx plans. CapEx is going to be elevated for the next few years, as I mentioned, but then it should tame down again. We have a quote from their conference call that I think really illustrates that they understand capital allocation well. Quote, we don't see or don't expect much movement there regarding the

buyback program. What I said is we are ready to be active. We operate depending on the stock price, the stock price during the first six months of the year, or seven months was higher than what we expected. So we operated less than we would originally thought. We cannot have high capex, high dividend, high BABX all at the same time because we're going to run out of cash. I like that straightforward nature. So that's something that we will divide. The dividend will be a balance between the buyback and the dividend. Our strategy will be to give back as much cash as we can, not keep cash that we do not need and keep that number as high as possible, whether it be through a dividend or buybacks. That's music to my ears for a high mode asset that's probably not

going to be that aggressive of a grower just through solid inflation adjustments, economic growth, and a little bit of pricing power. And if we look at 2025, the peso is appreciating versus the US dollar, which is a headwind, but a little bit unpredictable. I guess it doesn't much matter for US-based investors because if you buy the stock, it circles back around. But if listings pick up, the Mexican bull market continues and the modernization plans bear fruit, then Bolsa will be a solid performing stock over the long term. Again, you're buying at close to a 10% earnings yield today. The downside is that if they don't grow, you probably own a bond paying a 6% dividend yield every year. So I think that's your downside. And your upside

is this could be a really nice, you know, is it going to be a 10 beggar? Maybe not, but a really nice multi-bagger over the next decade if the bull case bears out yeah for me when i look at a new market the first two and when i say market geography the first two business models i look for are two two companies we've talked about today airports are there any publicly traded airports and stock exchanges the stock exchanges always have this reputational advantage where it's almost like a network effect where on the one hand you have capital on the other hand you have listings or investors and listings on both sides of the network and if you want to list where the most capital is and in mexico it sounds like bolsa mexico kind of has that advantage i like the

way you lay it out too where it's like worst case scenario maybe not worst case but in a likely bear case scenario you're sort of just getting a six percent coupon price doesn't go anywhere you get steady dividend yield. But in a good scenario, listings grow, debt offerings grow, you're getting revenue appreciation, higher cash flow, higher dividend payments, and maybe buybacks as well. There's a recipe for 10% plus annual returns easily. Yep. And a listener wanted to compare the, say, American stock exchanges to Mexico. I can look at ICE, which is ICE is their ticker intercontinental exchange. They own more than just the New York Stock Exchange. But today they're trading at a P.E. of 28, it says of their trailing 12 months.

Enterprise value is higher than their market cap. So the EV to true earnings is going to be higher than that. To me, sure, that's a good asset that'll earn you OK returns over the long term. but you have just as not just as high of quality, something that's still very high quality that you can buy in Mexico, which might be trading at 10 times earnings over the next few years. And over the long term, if the growth process plays out, it could grow to five times earnings based on today's price with a dividend yield that is quite healthy. Intercontinental exchanges, dividend yield is just 1.2%. So when you compare that, I think the risk reward opportunity for just a slightly like still very high quality business just makes much more sense to buy bolsa over

intercontinental exchange all right i think that's gonna do it that's our top five international stocks for 2025 we also own plenty of others i guess let's go quick honorable mentions you mentioned uh who was it at the top of the episode nintendo i guess i own grupo uh centro norte the northern mexican airport operator i also own coupon which operates in south korea as an e-commerce player so i'd say those would be my other international exposure but lots of other ones i looked at as well any ones that you want to mention ryan that float around your watch list and your radar coupon is one i own although we've talked about them a bajillion times so i thought maybe we'd go elsewhere yeah we decided not to put them in today yeah the other one that's

Moving more and more up my watch list is MercadoLibre. I saw an interesting stat that they are the only current public company that has delivered more than 30% revenue growth for 22 consecutive quarters. and that's year over year revenue growth and they've done it for 27 consecutive quarters so that was a that was the ceo that tweeted that out and i thought that was kind of interesting and then the last one i'll mention well two more taiwan semiconductor i actually do technically own a few shares very large moat there and then c limited is another one i've been looking at it seems to the 2021 gem yeah it's it's uh they're gonna come back the fundamentals have gotten better over since the peak the 2021 peak but people seem to be soured on them and i kind of like situations like that where it's been in the gutter for a while and people remember it for

one thing and then the business models evolved because at the time it was like a huge gaming business and now it's primarily sort of an e-commerce business so yeah that one might be might need a little revisit all right i think that's going to do it for this episode five international stocks for 2026 didn't choose six because i wanted to be better and a little different in the search results either way five companies let's list them off uh southern airport operator in mexico we have grab holdings wise also mexicana de valoris and airmen's a good mix smaller larger businesses and i'll mention once again we're closing out the episodes here so feel free to tune off if you already heard about fiscal ai but just as a

reminder for one week they're doing their black friday sale double the regular discount 30 off use our link fiscal debt.ai slash chitchat. As a disclosure, we are not financial advisors. Anything we say on the show is not formal advice or recommendation. Ryan, I or any podcast guests may hold securities discussed in this podcast, may have held them in the past and may buy, sell or hold them in the future. Thank you everyone for listening to this full episode. And we'll see you next time. Bye.