By Jen Wieczner and Scott DeCarlo
November 19, 2018

As for the rest of the world, investors are looking to places that are on a different curve of their economic cycle than the U.S., in hopes of catching their acceleration when the home economy begins to contract. European stock markets have continually lagged the U.S. during this bull run, and Saira Malik, head of global equities at Nuveen, thinks Saint-Gobain, a French construction materials conglomerate, has room to grow. With only 13% of its revenue in North America, it’s well insulated from any interest-rate-induced slowdown in the U.S. housing market—something Europe’s real estate industry has no need to worry about at the moment. (Half of Saint-Gobain’s sales come from renovations, not new construction, Malik adds.)

Dave Eiswert, manager of the T. Rowe Price Global Stock Fund, likes Essity, a Swedish maker of products like diapers and toilet tissue that has fared poorly as “synchronized global growth” made its paper pulp costs skyrocket. But as that growth falters and costs come down, the defensive stock “is going to experience a dramatic increase in earnings,” on the order of 12% to 15%, Eiswert predicts.

He’s also been buying Airbus, which he thinks is a year and a half behind its duopoly rival, Boeing, in terms of earnings growth (which has been booming at a rate of 21% over the past three years at Boeing). Airbus also trades at a 15% discount to Boeing on forward P/E. “It’s kind of like a Boeing 2.0 but at a lower valuation,” Eiswert says. “And we think in a low-growth world, people still fly in airplanes.”

Malik has also found a doppelgänger of an American favorite on sale in Brazil. Arcos Dorados, which literally translates to “golden arches,” operates the McDonald’s franchise throughout Latin America, and it trades on the New York Stock Exchange. The stock has underperformed amid the uncertainty surrounding Brazil’s recent presidential election. Now Arcos is poised to conquer more of the South American landscape, Malik says. She forecasts that the company will double its restaurants to some 4,200 in the next 10 years, with the proliferation driving double-digit earnings growth “for the foreseeable future.” While McDonald’s trades at 24 times earnings, Arcos trades at less than 16. But it will likely have a chance to catch up if Brazil surges and the U.S. slows down, as Malik anticipates.

Eiswert also believes that Brazil is poised to outpace the U.S. The country’s newly elected far-right President, Jair Bolsonaro, while controversial, may at least be good for business, he points out. That’s why Eiswert has been loading up on Brazilian stocks in the past few months, including Itaú Unibanco and Lojas Renner, a department store chain with an e-commerce business that he likens to the Gap. “Brazil is very, very much off cycle to the rest of the world,” Eiswert says. And when the sun sets on the bull market in much of the globe, off cycle is a nice place to visit.


PICKS:

Saint-Gobain (CODYY)
Essity (ESSYY)
Airbus (EADSY)
Arcos Dorados (ARCO)
Itaú Unibanco (ITUB)
Lojas Renner (LRENY)


Below, the rest of “The 30 Best Stocks to Buy for 2019.”

A version of this article appears in the December 1, 2018 issue of Fortune, as part of the story “2019 Investor’s Guide Stocks and Funds: Safety Meets Strength.”

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