Since the beginning of 2017, global activity has strengthened, with support from domestic growth in advanced economies and China, along with improved performance in other large emerging market economies. Per the World Bank’s report published in June, global economic growth is projected to be 2.7% for 2017, up from 2.4% recorded in 2016.

Moreover, the World Bank report stated that the U.S. economy will grow at a marginal pace of 2.1% — half the growth rate of 4.1% for developing countries and also lower than the global pace of growth.

The optimism surrounding improvement in the U.S. economy including continued strengthening of the labor market, increase in household spending, lower unemployment rate and rise in business activities is supported by the latest Fed’s projected economic growth of 2.5% for 2018 (up from the prior guidance of 2.1%).

Additionally, the implementation of tax legislation is anticipated to stimulate the market with more job creation and rise in inflation rate. Following the massive cuts in tax rates (from 35% to 21%) for the U.S. businesses, companies in various sectors are poised to benefit immensely. Notably, the S&P 500 index has recorded near 20% growth, year to date.

At the same time, the international market has been improving, with economic growth gaining momentum across the most advanced nations, which have been laggards for a long time. While accommodative monetary policy and fiscal stimulus are propelling growth, an improving labor market scenario and fortifying global trade are ensuring sustainability.

A measurable progress on overcoming weak industrial activities globally is making investors increasingly optimistic. This, along with expectations of improving profit margins with some economies nearing the turning points of monetary policy cycles and increasing demand from relatively less levered consumers and businesses, has helped foreign stocks record significant growth so far this year.

Therefore, an appropriate strategy for diversifying your portfolio by adding a few foreign stocks is feasible right now. These companies, mainly operating in their home countries, have an advantage of being largely influenced by local economic growth. A comprehensive fundamental and economic analysis shows that some foreign stocks can be more rewarding now.

Choosing the International Gems

To help you globalize your portfolio, we have hand-picked the foreign companies which have outperformed the U.S. market in 2017, with the help of the Zacks Stock Screener. We have selected foreign stocks that have a market capitalization of $5 billion or more, and carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

With the help of our Style Score System, we further narrowed down the list to ensure a VGM Score of A or B.

Here are the 3 top picks for your consideration:

Newbury, the U.K.-based Vodafone Group Plc (VOD - Free Report) operates as a telecommunications company globally. The company sells its products mainly through nearly 7,000 own-branded and franchised stores along with indirect partners, as well as through online sales and telesales.

Zacks Rank: #1
Market Cap: $83.4 billion
Year-to-date Price Change: 30.4%
VGM Score: B

Woori Bank Co., Ltd. (WF - Free Report), based in Seoul, South Korea, serves individuals, small- and medium-sized enterprises, and large corporations with commercial banking products and services in South Korea.

Zacks Rank: #2
Market Cap: $10.1 billion
Year-to-date Price Change: 42.3%
VGM Score: A

Headquartered in Santiago, Chile, LATAM Airlines Group S.A. (LTM - Free Report) is a provider of passenger and cargo air transportation services in South America, North/Central America, Europe, Africa, Asia, and Oceania.

Zacks Rank: #1
Market Cap: $7.7 billion
Year-to-date Price Change: 69.2%
VGM Score: B