Despite a turbulent global landscape in 2025, equity markets have remained resilient, a reminder of how well good businesses often respond to shocks and challenges. And it’s not just world events they’re having to cope with. Persistently high bond yields are raising the bar for equity investors.
When returns on cash in the bank and relatively safe bonds are high, it suppresses their appetite for stocks.
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Three global equities for your portfolio
Mitsubishi Electric (Tokyo: 6503) has long been a sprawling Japanese conglomerate, but recent years have seen rapid progress in corporate governance, aligning with government reforms. The company is implementing a return-on-invested-capital strategy to improve profitability. This has led to restructuring initiatives – such as spinning off the vehicle-electrification unit – to focus on higher-margin operations such as factory automation and air conditioning (vital for data centres).
In addition, its growing defence business, with advanced radar technology, adds another growth pillar. Not only is this company reasonably cheap on traditional metrics, but it also comes with huge balance-sheet value. The latter is key to traditional value investing and our analysis sees the stock trading well below the cost of rebuilding its various franchises.
One of the great opportunities that this market is throwing up is a set of companies that have demonstrated quality and compounding cash flows over many years. In the recent momentum and growth market, a number of these stocks have been left behind.
Thermo Fisher (NYSE: TMO) is one of these. It stands out as a leader in analytical instruments and services for clinical research, diagnostics, and environmental monitoring. Clients include pharmaceutical companies, research institutions and government agencies. From 2013 to 2023 it delivered annual free cash flow growth of approximately 15%.
Growth has moderated following the pandemic, while recent policy headwinds in research funding have reinforced the trend. This has been especially acute in the Trump presidency. Rather than rely on acquisitions, management has remained focused on improving the core business and growth rate. Last year, the company reaffirmed its expectation of long-term organic revenue growth guidance of 7%–9%. Combined with the target of robust cash generation, this supports the thesis that Thermo Fisher remains undervalued relative to its track record.
Seeking global stability and growth at reasonable prices has encouraged us to build a long-term position in Singapore Telecommunications (Singapore: Z74). The company excels at redeploying the strong cash flow it generates at home into higher-growth international markets, notably via Bharti Airtel in India, as well as holdings in Australia, the Philippines, Indonesia and Thailand. Indian mobile telephony is benefiting from easing competition, driving improved free cash flow.
In addition, 5G adoption and data centre investments underpin further expansion for the group. Singapore Telecommunications has also been adept at selling non-core assets to fund new growth and enhance shareholders’ returns. The current 4.7% dividend yield is well supported and highlights continued commitment to payouts.
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