We recently published a list of 12 High Growth International Stocks to Invest in Now. In this article, we are going to take a look at where Burford Capital Limited (NYSE:BUR) stands against other high growth international stocks to invest in now.
What To Expect From The Stock Market in 2025?
On January 15, Jurrien Timmer, Director of Global Macro at Fidelity Management & Research Company shared his outlook for 2025. He believes that the market has lost some of its momentum as the prospects of more rate cuts in 2025 have gone slimmer. One of the reasons for less likely rate cuts came a few weeks ago with a stronger-than-expected job market report, which sparked a market dip. Moreover, on the same day, long-term interest rates went higher. The 10-year treasury yield climbed closer to the 5% mark which has haunted stocks in the past.
However, Timmer believes the market is still in a bull phase, primarily driven by rising earnings, which he expects will continue to support market growth. This optimism is grounded in the historical performance of bull markets, where earnings often play a crucial role in sustaining upward momentum. He pointed out that as bull markets mature, they typically experience greater volatility. This means that even minor disruptions can lead to significant market fluctuations. High price-to-earnings (P/E) ratios contribute to this sensitivity, as elevated valuations can make the market more susceptible to corrections. Timmer also highlighted his concerns over interest rates, specifically, the Fed’s ability to cut rates, which are likely to persist. This “interest-rate angst” could continue influencing market behavior throughout the year, as investors will continue to grapple with how rate changes can affect stock valuations and overall economic conditions.
Moreover, Timmer also discussed the shifting dynamics in the stock market, particularly focusing on the transition from a narrow leadership group to a broader market participation. He noted that in the latter half of 2024, there was a notable shift in market leadership from the “Magnificent 7”, to a wider array of stocks. This broadening indicates that more sectors and companies are contributing to market gains, which is generally seen as a positive sign for overall market health. However, since mid-December, following the Fed’s reduced expectations for interest rate cuts, the market has lost momentum, as only 24% of stocks were trading above their 50-day moving average, and just 29% of S&P 500 stocks were outperforming the index. This indicates a narrowing participation in market gains, which is concerning for investors who prefer broad-based growth.
While talking about large-cap stock performance, Timmer raises the question of whether this trend of narrow leadership will persist. He suggested that trends continue to move in the same direction until a significant change occurs. Given that large-cap growth stocks have dominated for years, it is reasonable to assume that they may continue to lead. However, he also cautioned the investors that as per the concept of mean reversion, asset prices will eventually return to their historical averages and when this happens, it could lead to sharp corrections in stock prices. Timmer believes that while 2024 was a “Goldilocks year,” for earnings and valuations, this year can be a tussle between higher earnings and rising long-term interest rates, thereby resulting in a volatile market.
Our Methodology
To curate the list of 12 high-growth international stocks to invest in now, we used the Finviz stock screener and Seeking Alpha. We used the screener as a starting point of our research to get (Ex-USA) stocks that have grown their revenue by more than 15% during the last 5 years. Next, we checked these stocks for 10-year revenue growth rates from Seeking Alpha and selected only those stocks that had grown by more than 25% during the last decade. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders sourced from Insider Monkey’s third-quarter database.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An accountant meticulously going over documents in her office, exemplifying the company’s commitment to accuracy and detail.
Burford Capital Limited (NYSE:BUR)
10-Year Revenue Growth Rate: 33.63%
Number of Hedge Fund Holders: 22
Burford Capital Limited (NYSE:BUR) is a United Kingdom-based financial services company that specializes in providing legal finance to businesses and law firms. The company operates through three main business models including Capital Provision, Asset Management, and other services, which include additional services like litigation insurance.
The company is experiencing a strong performance in fiscal 2024, marked by significant financial achievements and growth in its operations. Burford Capital Limited (NYSE:BUR) generated $556 million in cash receipts year-to-date for fiscal 2024, with $310 million coming in the third quarter alone, setting new records for the company. In addition, the core portfolio’s net realized gains reached $184 million year-to-date, reflecting a 49% increase from the same period in 2023.
Management of Burford Capital Limited (NYSE:BUR) noted that it has seen a substantial increase in new commitments during the third quarter of 2024 compared to the same period last year, showcasing strong demand for its financing services despite a focus on managing an active portfolio. The investment case of the company remains strong as the Global Disputes Forecast 2025 report by Baker McKenzie indicates that 85% of organizations plan to increase their legal spending on disputes in 2025. Moreover, a notable 90% indicated that litigation remains their preferred method for resolving tax disputes, highlighting a reliance on formal legal mechanisms despite potential costs. Here’s what Greenhaven Road Capital stated regarding Burford Capital Limited (NYSE:BUR) in its Q3 2024 investor letter:
“Burford Capital Limited (NYSE:BUR) – We have owned litigation financer Burford for less than two years, but the progress was not long in waiting. Substantial developments in their legal case against Argentina have occurred, with the potential proceeds being multiples of BUR’s current share price. The Argentina case is far from their only valuable asset and Burford also holds another $5B of cases in their portfolio that could be worth substantially more.”
Overall, BUR ranks 9th on our list of high growth international stocks to invest in now. While we acknowledge the potential of BUR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BUR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
