I believe that international growth is a key part of delivering strong returns for ASX shares.
Australia is a great country, but it only has a small population. It's a good place to start, but businesses with global exposure have much larger growth potential due to the bigger total addressable market.
You can get that exposure either through ASX growth shares with international earnings like CSL Limited (ASX: CSL), or you can go for an investment product that offers that international growth potential.
Here are some great ideas:
A2 Milk Company Ltd (ASX: A2M)
A2 Milk could be one of the best ASX growth shares for international growth. The A2 Milk share price has fallen since the FY20 result. It's down 14% since the start of August. I think it's a good time to buy shares.
China and the USA are two big growth markets for the company.
Total A2 Milk revenue rose by 32.8% to NZ$1.73 billion in FY20. But Chinese label infant nutrition revenue more than doubled to NZ$337.7 million with store distribution growing to 19,100 stores. USA milk revenue growth rose 91.2% to NZ$66.1 million and the distribution grew to 20,300 stores – up from 13,100 at the end of FY19.
In FY21 the company is expecting continued strong revenue growth with a solid earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 30% to 31%.
I think this ASX share is one to watch. At the pre-open A2 Milk share price it's trading at 26x FY22's estimated earnings.
Magellan High Conviction Trust (ASX: MHH)
One of the best ways to get exposure to international growth could be to go for a quality listed investment trust (LIT) or company (LIC).
Magellan High Conviction Trust is a LIT that targets the best businesses in the world. A group of great companies can just keep winning year after year. The ASX share owns stocks like Alibaba, Alphabet, Microsoft, Tencent and Facebook. These are really good technology businesses that are constantly looking for ways to grow and diversify earnings.
Technology businesses are also some of the least affected by COVID-19 impacts because their service is provided digitally. Indeed, a business like Microsoft has seen a huge shift to its cloud infrastructure – bringing forward a lot of demand.
The stronger Australian dollar makes it better value to buy international shares. At the pre-open Magellan High Conviction Trust share price, the ASX share is trading at a 5.5% discount to the indicative net asset value (NAV).
PM Capital Global Opportunities Fund Ltd (ASX: PGF)
PM Capital is a well-respected fund manager which runs this LIC that looks for good value businesses when they're unloved by the market.
Some of the businesses that it owns include names like Cairn Homes, Bank of America, Visa, MGM China Holdings, KKR & Co, Siemens and Freeport-McMoRan.
I think that some of the cyclical businesses it's invested in could rebound nicely over the next few years as the global economy comes out of COVID-19.
The ASX share recently launched an off-market equal access buyback to boost the share price. It also grew its dividend in the recent FY20 result. It currently offers a grossed-up dividend yield of 6.4%, which I think is good in this low interest environment.
At the current PM Capital Global Opportunities Fund share price it's still valued at a 15% discount to the pre-tax net tangible assets (NTA) per share at 28 August 2020.
Foolish takeaway
I really like all three of these ASX shares for the international growth exposure. At the current price I think A2 Milk is too good to pass up considering it continues to grow at an impressive rate with more growth ahead as it expands its distribution network. However, both of the investment businesses look good value today too.
