8 ASX large-caps vs their global twins: Which is the better buy?

Australia represents just 2% of the global equity market, yet many local investors allocate the majority of their portfolios to Australian shares. That’s a serious case of home bias - and one that could be holding us back.

Data from superannuation accounting provider Class released in 2024 shows that 9.4% of SMSFs held international shares as of June 30, 2024, but those international shares made up just 2.4% of total SMSF asset allocation.

Inspired by Dr David Allen's recent piece “Sell CBA, buy JPMorgan?" Chris Conway and I decided to dig into eight Australian stocks that could be replaced with a similar international alternative.

Across each pair, we compare a homegrown blue chip with a global peer that, in many cases, offers better profitability, stronger growth potential, and more attractive valuations.

Note: whilst every effort was made to provide accurate and up-to-date data, some of the information - particularly for the international stocks - was difficult to obtain. We're also aware of the limitations of comparing companies based on the basic metrics used but hopefully they provide a good starting point for more detailed analysis. 

#1. Woolworths vs. Costco – Retail heavyweights

Costco (NASDAQ: COST) is the world’s third-largest retailer and sells everything from groceries to gas and clothing, often in wholesale quantities at lower prices.

Unlike Woolworths (ASX: WOW), Costco's edge is its membership-based model — it charges customers to shop, and in return, offers discounts on goods. Costco has successfully exported this model outside the U.S., including into Canada, Mexico, Australia and Japan, arguably making it the NASDAQ's hottest non-tech stock.

Verdict: Costco outshines Woolworths on most fronts. Despite a far lower dividend yield, it has a higher 5-year total return, higher net margin, and a more efficient business model driven by membership fees in addition to sales of goods.

However, a P/E of 57.89 for what is ultimately a low-margin business is enough to make any investor's head spin.

The company is priced for perfection, meaning it must continue proving that customers are falling in love with the brand and that its store rollout strategy is translating into strong growth figures. Any stumble in execution could see that premium valuation come under pressure.

#2. Woodside vs. Chevron – Energy giants

Chevron (NYSE: CVX) is one of the world’s largest integrated energy companies, with operations spanning oil, gas, and renewables across more than 180 countries. While Woodside (ASX: WDS) is more narrowly focused on LNG exports out of Australia, Chevron has greater upstream scale, downstream diversification, and global reach.

Verdict: This one is relatively clear-cut. Woodside offers stronger value and profitability metrics, with a much lower PE ratio, higher operating and EBITDA margins, and a significantly higher dividend yield. Chevron edges ahead slightly on ROE and has a lower debt-to-equity ratio, indicating more conservative leverage.

Overall, Woodside appears more attractive on valuation and income, while Chevron may appeal for its slightly stronger capital efficiency and balance sheet.

#3. BHP vs. Vale – Mining heavyweights

Vale (NYSE: VALE)  is a Brazilian multinational mining giant and the world’s largest producer of iron ore and nickel. Unlike BHP (ASX: BHP), which has a broader commodity base and a strong record on capital discipline and dividends, Vale is more exposed to emerging markets risk and volatility in its South American operations.

Verdict: If the previous comparison was pretty clear-cut, this one is a lay down misère. We Aussies are brilliant at mining and BHP is the godfather of that brilliance.

BHP outperforms Vale in most key metrics, with higher ROE, operating and EBITDA margins, and a lower C1 cash cost, indicating superior profitability and cost efficiency. It also offers a higher dividend yield and maintains a slightly lower debt-to-equity ratio.

While Vale has a lower PE ratio, suggesting a cheaper valuation, BHP’s overall financial strength and operational performance make it the more compelling investment based purely on the numbers.

#4. Macquarie vs. Goldman Sachs – Asset management titans

Goldman Sachs (NYSE: GS) is one of the most influential investment banks and asset managers globally, with a diversified business spanning trading, investment banking, and wealth management. Unlike Macquarie (ASX: MQG), which is known for infrastructure and regional strength, Goldman commands scale in U.S. capital markets and manages over four times the assets.

What also sets Goldman apart is its ability to generate extraordinary trading revenue in volatile markets. In the first quarter of this year alone, the firm reported a record US$4.2 billion in trading profits and US$15.1 billion in total revenue.

This feature, combined with Goldman's scale, access to the treasure trove of U.S. capital markets, and its significantly lower valuation, makes it a compelling alternative for investors seeking global exposure and financial firepower.

#5. CSL vs. Gilead – Biotech champions

Gilead Sciences (NASDAQ: GILD) is a U.S.-based biotech firm best known for its antiviral drugs, including treatments for HIV and hepatitis. While CSL (ASX: CSL) has a strong focus on plasma therapies and vaccines, Gilead’s pipeline includes oncology and next-generation HIV treatments, with materially higher R&D intensity and shareholder distributions.

Verdict: While CSL boasts stronger sales growth and lower price-to-book, Gilead comes out ahead on most other metrics. It has a higher net margin, lower PE, higher R&D intensity, and a stronger dividend yield. Gilead’s robust near-term pipeline in oncology and virology, combined with better capital returns and profitability, makes it the more attractive biotech holding at this time.

#6. Telstra vs. AT&T – Telecommunications

AT&T (NYSE: T) is one of the largest telecom operators in the U.S., providing wireless, broadband, and media services. Unlike Telstra (ASX: TLS), which dominates a smaller domestic market, AT&T benefits from massive scale and recurring revenue from over 100 million mobile subscribers, though it carries higher complexity across segments.

Verdict: Whilst it would have been nice to consider things like churn rate and subscription growth, finding these numbers was a challenge and the array of products to compare made it a non-starter. That said, based on the above AT&T is stronger on valuation and profitability, with a significantly lower PE ratio, higher operating and EBITDA margins, and slightly higher dividend yield. 

Telstra edges ahead on return on equity and average revenue per user (ARPU), though differences are modest. Both have similar debt-to-equity ratios.

Overall, AT&T appears to offer better value and profitability, while Telstra’s premium valuation may reflect perceived stability or market conditions.

#7. Vinci vs. Transurban – Infrastructure Operators

Vinci SA (DG.PA) is a French multinational specialising in concessions and construction, operating toll roads, airports, and large infrastructure projects worldwide. While Transurban (ASX: TCL) focuses heavily on Australian toll roads, Vinci has broader sector and geographic diversification including exposure to Europe, Latin America, and energy transition projects.

Verdict: Vinci SA clearly outperforms Transurban on most financial metrics, including ROE, EPS, and PE ratio, indicating stronger profitability and a more reasonable valuation.

While Transurban shows a higher EBITDA margin and yield, its extremely high PE and low earnings suggest limited current profitability. 

Vinci’s balanced performance, superior earnings power, and better capital efficiency make it the stronger investment overall, despite a slightly lower dividend yield.

#8. Qantas vs. IAG – Airlines on the rebound

International Consolidated Airlines Group (LSE: IAG) owns major European carriers like British Airways, Iberia, and Aer Lingus and has a vast global footprint and greater exposure to transatlantic and European routes, whereas Qantas (ASX: QAN) is primarily focused on domestic and regional Asia-Pacific travel.

Verdict: Qantas has recovered well post-COVID and boasts stronger total returns and revenue growth. However, IAG trades on a lower P/E, with a higher load factor, higher operating margin, and a much larger, globally diversified fleet.

Despite Qantas’s capital discipline and loyalty profits, IAG may offer better value and upside as global travel demand continues to normalise.

That said, Qantas remains one of the few airlines in the world that hasn't gone bankrupt, and it leads its European rival by a wide margin on the all-important metric of return on invested capital (58% vs 17%).

Final Thoughts

If Allen's piece challenged investors to rethink one core holding, this list makes a broader point: the other 98% of the global market is full of high-quality opportunities, and many are outshining our locals on the numbers alone.

But the idea isn’t to replace everything just for the sake of it. While global equity markets have often performed better, the smarter approach is to treat the equity universe as a toolkit - and to use the best companies for the job, no matter where they’re listed.

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Sell CBA, buy JPMorgan? The trade Australian investors need to consider

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