The market has experienced increased volatility over the last few weeks. Investors are still nervous about COVID and inflation, plus new issues including the debt ceiling debate and a possibility of an Evergrande default in China. At times like these, investors may look to lower their risk profile. 

One way to do that is to invest in lower-risk stocks, but another option is reducing risk by diversifying your portfolio in general. A great way to do that is by investing in stocks from outside the United States. While there is some performance overlap between domestic and international stocks, they aren’t totally correlated.

For instance, I measured the correlation between the SPDR S&P 500 ETF (SPY) and the iShares MSCI EAFE ETF (EFA), which measures the international stock market. EFA is 85% correlated to SPY. But if you're picking individual stocks, that correlation goes down even more.

If we go a step further, international tech stocks provide even more diversification. So, I ran a screen in our POWR Ratings system to find Buy-rated international tech stocks. Nokia (NOK), Silicon Motion Technology (SIMO) and SAP SE (SAP) are three top stocks worth considering.

Nokia (NOK) 

Finland-based NOK is a leading vendor in the telecommunications equipment industry. The company's network business derives revenue from selling wireless and fixed-line hardware, software and services. Additionally, its technology segment licenses its patent portfolio to handset manufacturers and makes royalties from Nokia-branded cellphones.

The company is poised to benefit from increased demand for next-generation connectivity. NOK has so far made progress on its three-phase journey of value creation. This includes “Reset,” which is this year's focus, plus “Accelerate” and “Scale” for next year and beyond. Its focus now is on capital allocation and technology leadership, as those factors will help growth this year. Things are going well as management raised its outlook for the full year 2021.

NOK is also looking to accelerate its product roadmaps and cost competitiveness by increasing investment in 5G. The company currently has 180 commercial 5G deals with communications service providers worldwide, as well as more than 240 5G engagements with operators (including paid trials).

Its 5G portfolio is gaining traction among enterprises, making up more than 12% of total 5G deals. Plus, NOK is seeing momentum in software and enterprise, which bodes well for its licensing business. The company has an overall grade of “B,” which translates to a “Buy” rating in my POWR Ratings system. NOK has a Value Grade of “B,” which certainly makes sense given its forward P/E of 13.59.

The company also has a Sentiment Grade of “A,” meaning it is well-liked by the analyst crowd. Seven out of ten analysts rate the stock a “Buy” with an average price target of $7.30. At its current price, that represents an upside potential of 33.7%. We also provide grades for Growth, Momentum, Stability and Quality, which you can find here.

NOK is ranked #14 in the B-rated Technology-Communication/Networking industry. For more top stocks in this highly rated industry, click here.

Silicon Motion Technology (SIMO) 

Headquartered in Taiwan, SIMO is a leading developer of microcontroller ICs for NAND flash storage devices. The company focuses on designing, developing and marketing controllers for managing NAND flash used in embedded storage applications, such as eMMC embedded memory. SIMO's products are used in personal computing, smartphones, tablets, flash drives and enterprise and data centers.

The firm has benefited from solid demand for its solid-state drive (SSD) controllers and eMMC and UFS controllers. This led to an increase in both revenue and sales year over year in the most recent quarter. The company is a leading merchant supplier of client SSD controllers to module makers. Management believes the market will soon be dominated by SSDs that use TLC flash.

That should bolster their use in PCs, displacing mechanical hard disk drives. SSD offers higher performance and competitive advantage over HDDs, which is why PCs are increasingly adopting them. Plus, the company believes its SSD controller will be used for managing 3D flash going forward and its eMMC controllers are showing signs of a rebound.

The company has an overall grade of “A” and a “Strong Buy” rating in our POWR Ratings system. SIMO has a Growth Grade of “B,” as its revenue has risen 26.3% over the past year. Plus, its EBITDA is expected to surge 30% over the next year. Analysts expect earnings to soar 110.5% year over year in the current quarter. SIMO also has a Quality Grade of “B,” indicating a solid balance sheet.

As of the end of the most recent quarter, the company had a cash balance of $357 million. This is up from the previous quarter and compares favorably to its current liabilities. For the rest of SIMO's grades (Value, Momentum, Stability and Sentiment), click here.

SIMO is ranked #9 in the B-rated Semiconductor & Wireless Chip industry. For more top-ranked stocks in this industry, click here.

Click here to check out our Semiconductor Industry Report for 2021

Note that SIMO is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.

SAP SE (SAP)

Founded in 1972 by former IBM employees, Germany-based SAP is one of the largest independent software vendors in the world. It provides database technology and enterprise resource planning software to enterprises across the globe. The company provides machine learning, Internet of Things and advanced analytics technologies that help customers derive insights and assist in decision-making.

The company is benefiting from strength in its cloud business, specifically its latest Rise with SAP solution. Management has been focused on expanding its cloud business to become a leading player in the space. Its current cloud backlog increased 17% in the second quarter. This is major, as a backlog is a clear indicator of market success in the cloud business.

SAP has already established dominance in three crucial client demand areas: efficient customer engagement, human experience management and an interconnected commerce network. This helps support growth. The firm is also seeing strong uptake of its S/4HANA and solid momentum in the Ariba and Fieldglass offerings.

Additionally, high demand for ecommerce and digital supply chain bodes well for the long term. SAP has an overall grade of “B,” translating into a “Buy” rating in our POWR Ratings system. The company has a Value Grade of “B,” which isn't surprising with a price-to-sales ratio of 5. This compares favorably to the industry average of 9.9. Its price-to-book is also well below the industry average.

SAP also has a Quality Grade of “B” as its liquidity situation looks healthy. As of the most recent quarter, the firm has $10.1 billion in cash on hand compared to no short-term debt. Plus, its debt-to-equity ratio of 0.5 is low. To gain access to all of SAP's grades (Growth, Momentum, Stability and Sentiment), click here.

SAP is ranked #6 in the Software – Application industry. For more top-ranked stocks in this industry, click here.

Click here to check out our Software Industry Report for 2021

NOK shares were trading at $5.53 per share on Monday morning, up $0.07 (+1.28%). Year-to-date, NOK has gained 41.43%, versus a 17.05% rise in the benchmark S&P 500 index during the same period.

David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.

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