Where the Money Is: 5 Overseas Stocks Trading at a Third of U.S. Prices

Every baseball fan knows the scoreboard can lie to you. A team can lead 1-0 in the 7th inning while every hitter in the lineup is 0 for 3, because one swing in the 2nd inning cleared the fence.

That is the S&P 500 right now.

On Friday, October 16, the index closed about 2% below its all-time high. Judging by the scoreboard, the market looks fine.

Look at the lineup. That same day, about 1 in 3 stocks in the S&P 500 closed more than 20% below its 52-week high. That is a bear market, stock by stock, inside an index that sits near a record. In real estate, utilities, and materials, more than 9 of every 10 stocks were at least 10% off their highs.

A handful of hitters are carrying the whole team, and they are all swinging at the same pitch.

The 10 biggest AI stocks now make up about 40% of the S&P 500. The last times a single theme took that much of the market were the Nifty Fifty in the early 1970s and tech and telecom in early 2000. If you hold an index fund or a target date fund, you own that bet. You did not pick it. It arrived through the weighting.

Then the pitching changed. On September 16, the Federal Reserve raised interest rates for the first time since 2023, a quarter point to a range of 3.75% to 4%. Inflation had picked up again after the energy shock from the Iran war, and 12 of the Fed's 18 top officials expect another hike before the year is out.

The AI trade has started to feel it. In the week ending October 16, the largest tech index fund fell 7.7%. CoreWeave, one of the companies building AI data centers, lost 25%.

This AI boom ends in one of two ways. It keeps going, or it breaks. I do not know which, and neither does anyone else.

What I do know is that you do not have to make that bet to put your money to work.

Outside the United States, there are profitable businesses with strong balance sheets trading at a fraction of what American investors pay. Investors have ignored them for most of the past 15 years. Their results do not depend on whether the AI boom keeps going or breaks.

That is where I have been looking.

What I look for is specific: companies trading below tangible book value, at low multiples of cash flow, and at prices that assume permanent disappointment.

This is not a new idea. It is one of the oldest ideas in investing.

Ben Graham built fortunes buying stocks below asset value. Marty Whitman spent decades buying companies where the balance sheet was worth more than the market capitalization. Walter Schloss generated exceptional returns by purchasing companies selling below book value and waiting patiently for investors to rediscover them.

The fascinating part is that while these opportunities have largely disappeared in the United States, they remain abundant throughout Europe, Japan, the United Kingdom, Australia, Singapore, and other developed international markets.

That matters.

The academic evidence supporting deep value investing is overwhelming. Research from Eugene Fama and Kenneth French established the long term power of value investing across global markets. Later studies by Josef Lakonishok, Robert Haugen, James O'Shaughnessy, Tobias Carlisle, Wes Gray, Cliff Asness, and many others repeatedly demonstrated that buying the cheapest stocks based on book value, cash flow, earnings, and enterprise value has historically generated excess returns.

What is particularly interesting is that the effect appears even stronger internationally.

Several academic studies have shown that the cheapest stocks in developed international markets have historically produced higher returns than both broad market indexes and more expensive value stocks. The phenomenon is especially powerful when investors focus on companies with strong balance sheets and sufficient financial strength to survive temporary adversity.

That fits perfectly with my own approach.

I have never been interested in buying bad companies.

I am interested in buying good balance sheets at bad prices.

That distinction matters.

Many investors hear the phrase "deep value" and immediately picture some dying business with declining sales, mountains of debt, and a management team that should probably be investigated by several regulatory agencies.

That is not what we are doing.

We are looking for companies trading below tangible book value, below replacement cost, or at absurdly low multiples of cash flow despite possessing healthy balance sheets, real assets, and the ability to survive until market sentiment changes.

International markets currently offer those opportunities in abundance.

According to GMO research, developed international markets continue to trade at discounts of roughly 25% to 50% compared to U.S. equities across multiple valuation measures. Even after recent outperformance, the cheapest international stocks remain extraordinarily inexpensive relative to both their own history and U.S. markets.

GMO's research focuses on the cheapest 20% of developed international stocks and finds that deep value remains unusually discounted relative to both the broader market and traditional value indexes. Their work suggests that the valuation spread between deep value stocks and the overall market remains historically wide, creating substantial potential for future mean reversion.

Those valuation gaps are extraordinary.

As of March 2026, GMO's international deep value portfolio traded at roughly 1 times book value, 7.5 times cash flow, and 11.3 times forward earnings. Comparable multiples for the S&P 500 were 5.1 times book value, 21.4 times cash flow, and 21.5 times forward earnings. In plain English, investors are paying almost three times as much for every dollar of cash flow in the United States as they are in international deep value stocks.

That is not a normal relationship.

More importantly, these discounts exist despite improving fundamentals.

Corporate governance reforms in Japan continue to encourage higher returns on capital and shareholder friendly actions. European banks have repaired balance sheets after years of regulatory pressure. Many international industrial companies are benefiting from reshoring, infrastructure investment, and defense spending trends. Capital allocation has improved dramatically across much of the developed world.

Investors, however, remain anchored to the narrative that only America offers attractive investment opportunities.

History suggests that narratives eventually change.

One of the strongest arguments for international deep value right now has nothing to do with individual companies. It is the dollar.

The U.S. dollar remains near historically elevated levels relative to many developed market currencies. The yen, euro, and pound sterling all remain inexpensive compared to long term averages. GMO specifically highlights exposure to these undervalued currencies as an important component of the international deep value opportunity.

Currency cycles matter.

American investors often forget that buying international stocks involves purchasing both businesses and currencies. When the dollar eventually weakens, international investors frequently receive an additional tailwind beyond the performance of the underlying companies.

You get paid twice.

First through earnings growth and valuation expansion.

Second through currency appreciation.

That combination has historically produced some very attractive periods of relative outperformance.

This setup should look familiar to anyone who has watched me buy community banks at discounts to tangible book value. When we purchase a community bank at 70% of tangible book value with excess capital, low credit risk, and a solid dividend, we are essentially betting that eventually the market will recognize the disconnect between price and value.

International deep value investing is the same exercise on a larger scale.

Instead of buying one cheap bank in Ohio or New Jersey, we are buying entire baskets of companies throughout Japan, Germany, France, the United Kingdom, Singapore, Australia, and other developed economies where investors have become excessively pessimistic.

The risks are obvious:

Those concerns are real.

Fortunately, the beauty of deep value investing is that we do not require perfection. We simply require outcomes that are less terrible than current prices imply.

When a stock trades below tangible book value, or at 5 times cash flow, expectations are already extraordinarily low. Positive surprises become far more likely than negative surprises.

That is the essence of successful value investing.

Buy assets where pessimism is fully priced in.

Wait patiently.

Allow fundamentals and mean reversion to do the heavy lifting.

The opportunity today is especially compelling because we are not talking about obscure frontier markets or speculative emerging economies. We are discussing mostly developed countries with functioning legal systems, established capital markets, sophisticated corporations, and long histories of wealth creation.

The index chose AI for you. That worked, for a while.

The next decade may belong to tangible assets, cash flow, balance sheets, dividends, and valuation discipline.

Those are exactly the characteristics that define international deep value investing today.

At some point investors will rediscover the simple truth that paying less for assets generally produces better long term returns.

When that happens, the cheapest stocks in the developed world may become one of the most profitable places to invest.

Fortunately, they are still hiding in plain sight.

Finding cheap stocks outside the United States is easy right now. The hard part is narrowing the list. Markets abroad are still full of companies trading at discounts that would have Ben Graham, Marty Whitman, and Walter Schloss reaching for their checkbooks.

These 5 cover different industries and different corners of the world. What they have in common is a price that, in my view, does not reflect what the business owns or what it earns.

Henderson Land Development $HLDCY

Global investors gave up on Hong Kong property years ago. Political worry, higher rates, and fears about mainland China pushed one of the world's great property markets to a deep discount.

The business has kept going anyway. In the first half of 2026, Henderson's underlying profit rose 66% to HK$5.07 billion. Attributable revenue from Hong Kong property sales more than tripled, and contracted sales reached about HK$18.1 billion. Gearing fell to 17.9%. The company sits on about 20.3 million square feet of attributable floor area in Hong Kong, and its rental properties were 94% leased.

The shares still trade well below the value of that real estate. I have watched pessimism about Hong Kong property hit extremes before. Patient buyers have historically done well when it did.

KT Corp. $KT

The "Korea Discount" is starting to close. Seoul is pushing listed companies to stop hoarding capital, and KT is one of the clearest examples of a company responding.

KT runs South Korea's largest telecom network, infrastructure nobody could rebuild at any sensible price. People pay their phone and internet bills before they buy a new car or book a vacation. That makes the cash flow steady and predictable.

Management has committed to returning 50% of adjusted net income to shareholders through dividends and buybacks. It has guided to a dividend of at least KRW 2,400 per share for 2026, paid quarterly, and its value-up plan targets a return on equity of 9% to 10% by 2028.

A dull business, a rising payout, and a valuation far below comparable U.S. telecoms. That is the kind of setup I want.

Yancoal Australia $YACAF

Coal is the most hated industry on earth. Pension funds have banned it, banks will not lend to it, and most analysts will not cover it. That is exactly why I am interested.

Yancoal is Australia's largest pure coal producer, with mines in New South Wales, Queensland, and Western Australia. In the first half of 2026, it dug a record 19.8 million tonnes of saleable coal. Operating EBITDA rose 29% to A$767 million, and management expects a full-year production record.

The headline profit looked terrible. It fell 90%, almost entirely because of accounting charges on US dollar loans. The coal business underneath earned more, not less.

The balance sheet was the other attraction. At June 30, Yancoal held A$2.1 billion in cash against almost no debt. On October 1, it put that cash to work, closing a US$1.85 billion deal for 80% of the Kestrel mine in Queensland, paid for with cash on hand and a US$1.2 billion loan. Kestrel produces mostly coking coal, the kind steelmakers need and cannot easily replace.

The market has shrugged. The shares fell nearly 30% in the 6 months to early October and trade about 12.5 times next year's expected earnings. Yancoal is required to pay out at least half its profit or free cash flow, whichever is higher, as dividends.

Nobody wants to own coal. In my experience, that is when the price has the most room to be wrong.

Pyxis Tankers $PXS

Small Greek shipowners are about as neglected as stocks get. Institutions cannot buy them in size, and analysts rarely cover them.

Pyxis owns 6 ships: 3 product tankers that carry refined fuels and 3 dry-bulk carriers. Q2 2026 was its strongest quarter in nearly 2 years. Revenue rose 32.6% to $12.1 million, and the company earned $2.8 million after losing money a year earlier. It holds $58.2 million in cash against $83.2 million of debt, and nothing matures until September 2028.

Management told us what it thinks the stock is worth by buying it back. In Q2, Pyxis repurchased shares at an average of $4.32. Shareholders' equity works out to roughly $9.80 a share, so the company was buying its own stock for less than half of book value.

That is a good balance sheet at a bad price, the whole idea of this report in a single stock.

Dream Industrial REIT $DREUF

Most American investors have never looked at Canadian REITs. That is their loss.

Dream Industrial owns 348 warehouse and logistics properties, about 75.7 million square feet across Canada and Europe, plus a stake in a U.S. industrial fund. In Q2 2026, net operating income at its comparable properties rose 10.3%, and FFO per unit rose 7.8%. Leverage dropped to 35.8% of assets. Management also raised the distribution 2.5%, the first increase since 2013.

The REIT puts its net asset value at C$16.76 per unit. The units trade well below that. U.S. buyers also pick up Canadian dollar exposure, the "paid twice" setup from earlier in this report.

These five companies are not speculative moonshot stocks. They are not artificial intelligence stories. They are not momentum names attracting headlines on financial television. They are exactly the type of neglected, asset rich, cash generating businesses that have historically formed the foundation of successful deep value portfolios.

If the case for international deep value proves correct over the next several years, companies such as these could provide investors with both substantial upside potential and a meaningful margin of safety.

These five are a free starting point, not a portfolio. The discipline that finds them - good balance sheets at bad prices, here and abroad - is the same one that runs the Flagship Report's Small-Cap Deep Value portfolio every week. Most investors are stuck with wherever the S&P 500 takes them, fully exposed to the most expensive market in a century. Flagship subscribers own four portfolios built to work in up years, down years, and sideways years.