The Aussie market is 2,343 companies strong. Still, the local bourse represents only a fraction of the worldwide investable pool at a minuscule 2% of global market capitalisation.

To focus a portfolio solely on ASX-listed companies would be to starve it of some of the greatest investment opportunities the world has to offer, in my opinion.

Not only that, but it also presents a risk in the form of geographical concentration. Putting all your eggs in one geographic basket could greatly underperform a more scattered approach. A quick glance at the S&P/ASX 200 Index (ASX: XJO) versus an MSCI World ETF since 2012, shown below, proves this point.

So let's chart a course. Destination? A truly global portfolio across several share markets.

Here are my top picks from seven different exchanges right now.

Where I'd go for global diversification

There are many more share markets than seven. However, I suspect the seven I've selected would be sufficient to get a decent cross-section of global equities. As with anything, the law of diminishing returns often applies.

My focus would gravitate toward companies in Europe, the United States, and the Asia-Pacific region (China, India, and Australia).

European share markets

1. Rightmove

The first cab off the rank is possibly my favourite opportunity abroad among this lot. Rightmove Plc (LON: RMV) is the largest online real estate property portal in the United Kingdom, pulling in more than 91 million site views last month. Its next closest competitor, Zoopla, trailed distantly behind with 31 million.

Think of Rightmove as the REA Group Ltd (ASX: REA) of the UK. However, Rightmove enjoys far greater margins and trades on a lower price-to-earnings (P/E) ratio (24 times) than REA Group (51 times).

In addition, the UK platform provider is debt-free with around A$75 million equivalent in cash. Whereas REA Group had a net debt position of $174.4 million at the end of December 2022.

With a track record of buying back stock, management has demonstrated its resolve to reward shareholders.

2. Truecaller

We have all contended with unwanted calls and texts. Not only are they a nuisance, but they can also be financially damaging. According to the Australian Communications Consumer Action Network, Aussies lost out on $1.4 million to scam texts in January this year alone.

Based out of Stockholm, Sweden, Truecaller AB (STO: TRUE-B) is a software company making communications "smarter, safer, and more efficient". Now trumpeting 344 million average monthly active users, it has become a leader in its space.

The bulk of Truecaller's revenue is derived from supporting advertising through its app. This accounted for roughly 80% of the company's latest quarterly revenue. Although, the business is making meaningful strides in growing its consumer and business subscriptions, pictured above, to diversify revenue streams.

Forecasts suggest Truecaller could grow its earnings at an annualised rate of more than 25% per annum moving forward. Yet, investors can buy a slice now at 26 times earnings. That seems like a fair price to pay for this solid business, in my opinion.

American share markets

3. Edwards Lifesciences

Listed on the New York Stock Exchange, Edwards Lifesciences Corp (NYSE: EW) develops a range of specialised healthcare products to treat structural heart diseases in a minimally invasive manner.

The medical technology company's main revenue source is its transcatheter aortic valve replacement (TAVR). Offering a solution for treating aortic stenosis (narrowing of the aortic valve) without resorting to open heart surgery has been pivotal in Edwards growing its revenue by 59.6% over the past five years to US$5,501 million for the 12 months ending 31 March 2023.

While the need for TAVRs is typically an age-related event, a generally unhealthy lifestyle can increase the risk of requiring intervention. Recently, a report has suggested more than half of the global population will be overweight by 2035.

In my opinion, Edwards is well-positioned to serve a growing aging and overweight population. At around 36 times earnings, it is also one of the lesser richly valued companies with exposure to this trend.

4. Vertex Pharmaceuticals

Sticking with US share markets, we have Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX). However, rather than making medical devices, Vertex develops and commercialises therapies. Its most well-known product is Trikafta, a treatment for cystic fibrosis (CF) sufferers.

When it comes to improving the lives of people dealing with CF, Vertex is almost the only horse in the race at the moment. Impressively, the next closest competitor to Trikafta is another treatment being developed by Vertex.

Vertex enjoys net margins of more than 30%, holds in excess of US$10 billion in cash, and is parading several other drugs in development for other diseases (pictured above).

Despite this, the company is valued at 27 times its earnings. I wouldn't consider that expensive given the potential growth on offer here.

Asia Pacific share markets

5. Plover Bay Technologies

Few things are as important as internet connectivity in the modern world. These days, downtime in our network comes with a tangible, often high, cost.

Based out of Hong Kong, Plover Bay Technologies Ltd delivers "supercharged connectivity" to its customers across North America, Europe, the Middle East, Africa, and Asia. Through a combination of hardware and software, the company brings increased reliability to those who need it.

Networks are becoming increasingly complex. Businesses are tasked with utilising a combination of wired, wireless, or even satellite connection — depending on the application. Yet, Plover Bay is priced at around 14 times earnings.

I will say there is considerable customer concentration risk here. The company's top five customers accounted for 54% of total revenue at the end of 2022.

6. Tips Industries

Digital advertising continues to go from strength to strength, minting millions for those able to draw a substantial audience via their content. Just look at the incredible success of YouTube icon MrBeast.

Tips Industries Ltd is an Indian music record label and film producer. The company mainly makes money by collecting subscription and ad-supported revenue on music and films it holds the rights to. I like to think of it as the Universal Music of India.

What makes Tips appealing in my eyes is its profitability, its cashed-up balance sheet, and strong returns on capital. At an industry level, the Indian digital ad space is surging, increasing at an expected compound annual growth rate (CAGR) of 29% between 2018 to 2024.

As a result, Tips Industries would be my top pick within Indian share markets.

7. Macquarie Group

Finally, it is time for my top buy on our local share market, Macquarie Group Ltd (ASX: MQG).

The millionaire factory is arguably home to some of the most talented individuals in the finance and trading industry. Undoubtedly this has played a major role in the investment bank's astounding rise in profits over the last decade.

Although the outlook is gloomy for global economies, I find it hard to fathom how this company isn't meaningfully more valuable years from now. The management team is impeccable and Macquarie remains highly regarded in the industry.

At around 14 times earnings, Macquarie shares are looking far cheaper than they were two years ago.

The post Around the world: My top buys from 7 global share markets appeared first on The Motley Fool Australia.

We won't officially be in a recession until the National Bureau of Economic Research says so. However, you can nearly throw a rock in any direction and find an economist who thinks a recession is probably on the way.

For example, Johns Hopkins economics professor Steve Hanke stated a month ago that he believes there's at least an 80% chance of a recession. Non-profit research group The Conference Board recently pegged the probability at 96%. The latest Bloomberg economic model projects a 100% chance of a recession by October 2023. 

These forecasts don't guarantee that a recession is coming. But it's possible that the current bear market will continue for a while longer. That doesn't mean that every stock will be a big loser, though. Which stocks are most likely to thrive in a recession? Here's what history shows.

Some bad news

The SPDR Select Sector exchange-traded funds (ETFs) are good proxies for gauging how different sectors perform during recessions. One primary downside of using them is that most of these ETFs have only been around since the late 1990s. However, the U.S. has experienced three recessions during that period, so the SPDR Select Sector ETFs should be able to help in determining which stocks historically thrive in a recession.   

I've got some bad news, though. None of the SPDR Select Sector ETFs performed well in all three recessions that occurred over the past 25 years. 

The Consumer Staples Select Sector SPDR Fund (NYSEMKT: XLP) held up well during the recession of 2001. However, it still slid a little. The Materials Select Sector SPDR ETF (NYSEMKT: XLB) performed similarly during the first recession of this century. (The shaded area in the charts below indicates the period when the U.S. economy was in recession.)

XLP data by YCharts

However, both of these ETFs plunged during the Great Recession that began in late 2007 and went through mid-2009. So did every other sector ETF -- including (perhaps surprisingly) the Utilities Select Sector SPDR Fund (NYSEMKT: XLU). 

XLP data by YCharts

All of the sector ETFs also tanked during the brief coronavirus-fueled recession of 2020. However, the Consumer Staples Select Sector SPDR Fund didn't fall nearly as much as the others did.

Looking for exceptions

The cold, hard truth is that no category of stocks thrives in all recessions. But it's clear from examining the past that consumer staples stocks tend to perform better than most. Your best bet, though, is to look for exceptions. I'm referring to stocks that have factors working to their advantage so much that investors want to buy them even when the overall economy stinks.

Johnson & Johnson (NYSE: JNJ) stood out as this kind of stock during the recession of 2001. The healthcare giant continued to deliver revenue and earnings growth throughout the period. It completed the $10.5 billion acquisition of ALZA Corporation. The blue-chip stock was also viewed as a safe haven for investors worried about the dot-com bubble bursting.

JNJ data by YCharts

Walmart (NYSE: WMT) performed exceptionally well during the Great Recession, especially considering how most stocks plunged. Investors realized that the serious economic downturn would mean that consumers would have to tighten their purse strings. That worked to the advantage of the big discount retailer.

WMT data by YCharts

Moderna's (NASDAQ: MRNA) share price skyrocketed during the quick recession of 2020. That's not surprising. The company was one of the early leaders in developing coronavirus vaccines. Moderna was a natural choice for investors to flock to during the uncertain times at the beginning of the COVID-19 pandemic.

MRNA data by YCharts

Likely outliers in the next recession

Which stocks might be outliers in the next recession, assuming it isn't too far off? I think we can learn from history. 

Walmart could again defy gravity if the U.S. economy enters into a recession. My view is that another discount retailer, Dollar General (NYSE: DG), should do so as well.

Dollar General is outperforming Walmart so far this year. The company continues to build new stores. It's also expanding its frozen and refrigerated goods offerings. Dollar General should benefit as consumers increasingly try to stretch their dollars.

Just as Johnson & Johnson and Moderna performed well during two previous recessions, I suspect another drug stock will do so during the next recession -- Vertex Pharmaceuticals (NASDAQ: VRTX). Vertex's revenue and earnings will almost certainly grow robustly even amid an economic downturn. 

The big biotech also has a pipeline with multiple potential blockbusters likely on the way. Vertex expects to file for regulatory approvals for one of them (gene-editing therapy exa-cel) before year-end. With fears of a recession increasing, I think that Vertex is arguably the best stock to buy right now.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Which stocks are most likely to thrive in a recession? Here's what history shows appeared first on The Motley Fool Australia.

Between rising interest rates, a potential recession on the horizon, and a bear market in full swing, it's a fraught time to be an investor. And that's especially true for those who prefer to buy growth stocks, which have been hit significantly harder than the market as a whole. The market-tracking SPDR S&P 500 ETF Trust (NYSEMKT: SPY) is down by more than 11% over the past 12 months, while the large-cap SPDR Portfolio S&P 500 Growth ETF (NYSEMKT: SPYG) is off by around 18% in the same period. 

So should investors shy away from expansion-phase companies for a while, seeing as how conditions appear to be poor for them in the present and likely tenuous in the near future? The answer depends on your goals for investing, the riskiness of the stock you're thinking of, and -- last but not least -- your own mental fortitude, so let's break these issues down individually. 

Determine your time horizon

Before you can answer for yourself whether it's appropriate to be buying growth stocks right now, you'll need to figure out how long you want to hold your shares. Another way to frame that question is to ask when and why you'll need to take out the money from your investment. 

If you think you might need your funds back into cash within a couple of years, you probably shouldn't be buying any type of stock, as it could take longer than that to reach the price level where you bought the shares. In contrast, if you're investing for the long-term (and you should be), it could still be a good time to buy, but there's more to the story. 

By definition, growth stocks are backed by growth-phase companies that often aren't yet focused on profitability and that are too immature to consider giving capital back to shareholders. In practice, that means if you decide to sit on the sidelines instead of buying shares, you could be missing out on a significant run-up as businesses expand quickly over time. It's also possible that you could be sagely dodging a catastrophic collapse in share prices caused by any of the many headwinds in force right now. 

It isn't possible to determine which of those two outcomes are going to occur in advance, but you can improve your chances by being picky about which growth stocks you invest in and how much of your capital you choose to commit to them. And if you can do that, now's a decent time to be buying. 

Allocate your risk budget conservatively 

Being careful with your investments amid the ongoing economic uncertainty means favoring growth companies that are likely to weather the turbulence with grace and avoiding those that won't. 

For example, Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) develops medicines for rare diseases like cystic fibrosis. It'll keep performing clinical trials and commercializing drugs regardless of a recession, and its patients will need to keep buying its therapies (or getting their insurers to pay) no matter what. Plus, rising interest rates don't threaten it much at all, because it's profitable, expanding its top line consistently, and it also generates enough free cash flow to avoid needing to habitually borrow money. And it's currently shrugging off the bear market without breaking a sweat, with its shares rising by nearly 28% so far this year in comparison to the market's fall of 19%.

So, Vertex looks to be a growth stock that's ripe for buying, even now. But with other companies, the reverse may be true.

Consider the multinational cannabis business Tilray Brands (NASDAQ: TLRY). It isn't profitable, and this year its quarterly gross margin is contracting under pressure. Its quarterly revenue growth is flat over the past year, and there are problems with oversupply in the cannabis market that are likely to force it to write down its inventory at a loss (again) or lower its selling prices. Therefore, with its performance questionable even before the headwinds of 2022, it probably isn't a good time to buy, unless you can tolerate quite a bit of additional risk beyond what's normally associated with the stock.

Can you invest and still get a good night's sleep?

Per the previous section, investing in the most resilient growth stocks is still a good decision in today's environment, even though investing in the more speculative plays could be more risky than usual. But perhaps the biggest issue is whether you can accept the risks of the growth companies you decide are worth investing in, even when the going gets tough. 

If buying shares of a risky business right now is going to have you checking on your portfolio multiple times per day, it probably isn't worthwhile. You only get the benefit of a company's gain in value over time if you are actually able to hold its shares without selling them out of fear or stress about their future worth. 

If you can tolerate your positions being underwater for a few months or years, it's a perfectly good time to buy riskier growth stocks like Tilray, assuming you're comfortable with the chance of actually losing your money -- but if that thought terrifies you, it's best to find growth investments like Vertex that are likely to have a bit more staying power regardless of the economy or the market.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is now the right time to be buying growth stocks? appeared first on The Motley Fool Australia.