In this article we discuss the 10 best ADR stocks to buy In 2021. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best ADR Stocks to Buy in 2021.
Investors in the United States have been steadily pouring money into foreign equities ever since the process was made easier through the introduction of American Depositary Receipt (ADR) in the early part of the twentieth century. According to an estimate by financial expert Arin Ray, the investments into ADRs were increasing at a rate of more than 10% almost a century after they were first introduced, reaching close to $4 trillion by the end of 2010, representing approximately 20% of the total equity holdings in the US.
Ray, part of financial services company Celent, cited the high rates of return and a frenzy for diversification as some of the main reasons behind the popularity of ADRs. Since his research was published, the size and trading activity of ADRs on the stock market has grown dramatically. Chinese companies like Alibaba Group Holding Limited (NYSE: BABA), Baidu, Inc. (NASDAQ: BIDU), and NIO Inc. (NYSE: NIO) now represent an increasing chunk of the total ADR-related spending in the US, taking the mantle over from British firms in the past few years.
Alibaba Group Holding Limited (NYSE: BABA) is a technology company with core interests in ecommerce. According to a data depository on ADRs, maintained by investment bank JP Morgan, Alibaba Group Holding Limited (NYSE: BABA) is the second most popular ADR on the market in the US, with a 30-day average trading volume of 15.70 million and a prior day trading value of over $2 billion. The bank has grouped Alibaba Group Holding Limited (NYSE: BABA) into the consumer services category in the depository.
NIO Inc. (NYSE: NIO), the Shanghai-based electric vehicle maker often referred to as the ‘Tesla of China’ is the most popular ADR on the market. It has a 30-day average trading volume of close to 71.5 million and a prior day trading value of $2.21 billion. NIO Inc. (NYSE: NIO) has recently been hit by supply chain issues and falling demand for electric vehicles in the first few weeks of the second quarter, posting 6,711 vehicle deliveries in May, a 5.5% month-on-month decrease that still represents over 95% year-on-year increase.
Another foreign equity that is very popular in the US is Beijing-based Baidu, Inc. (NASDAQ: BIDU), the internet services company that operates the Chinese internet search engine and has invested aggressively in artificial intelligence in recent years. Baidu, Inc. (NASDAQ: BIDU) is one of the most active and volatile stocks on the market this year, reaching a 52-week high of over $354 in late February, before plunging amid a Chinese antitrust crackdown that saw share prices fall close to 50% in the ensuing weeks.
Investors should be wary of political, inflationary, and exchange-related risks often associated with ADRs before pouring money into them. ADRs are a high risk, high-reward offering that even hedge funds find difficult to manage. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of the 10 best ADR stocks to buy in 2021. While selecting these stocks, we kept in mind the investor interest around these companies, the ratings of market analysts, as well as the basic business fundamentals which might help these firms grow through the rest of the fiscal year.
Best ADR Stocks to Buy in 2021
10. BioNTech SE (NASDAQ: BNTX)
Number of Hedge Fund Holders: 18
BioNTech SE (NASDAQ: BNTX) is a Germany-based biotechnology company founded in 2008. It is placed tenth on our list of 10 best ADR stocks to buy In 2021. The company’s shares have offered investors returns exceeding 402% over the past twelve months. The company has pioneered a patient-specific approach to therapeutics for the treatment of several diseases, including advanced melanoma, prostate cancer, multiple solid tumors, and others. It has a market cap of over $57 billion.
On May 20, BioNTech SE (NASDAQ: BNTX) CEO Ugur Sahin told news media that the COVID-19 vaccine developed by the company was up to 75% effective against the Indian variant of the coronavirus.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $172 million in BioNTech SE (NASDAQ: BNTX), up from 17 the preceding quarter worth $170 million.
9. Gold Fields Limited (NYSE: GFI)
Number of Hedge Fund Holders: 15
Gold Fields Limited (NYSE: GFI) is a South Africa-based gold mining company founded in 1998. It is ranked ninth on our list of 10 best ADR stocks to buy In 2021. The stock has returned more than 36% to investors in the past year. The company is dual-listed in South Africa and the United States, with mining interests in Chile, South Africa, Ghana, Australia, and Peru, among other countries. These mines have an annual gold-equivalent production of almost 2.24 million ounces, with reserves of over 50 million ounces.
On May 6, Gold Fields Limited (NYSE: GFI) posted earnings results for the first three months of 2021, reporting a revenue of over $1.7 billion in the first quarter of 2021, up more than 14% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Gold Fields Limited (NYSE: GFI) with 12.4 million shares worth more than $117 million.
Just like Alibaba Group Holding Limited (NYSE: BABA), Baidu, Inc. (NASDAQ: BIDU), and NIO Inc. (NYSE: NIO), Gold Fields Limited (NYSE: GFI) is one of the best ADR stocks to buy In 2021.
8. AstraZeneca PLC (NASDAQ: AZN)
Number of Hedge Fund Holders: 34
AstraZeneca PLC (NASDAQ: AZN) is a United Kingdom-based biotechnology company founded in 1999. It is placed eighth on our list of 10 best ADR stocks to buy In 2021. The company’s shares have offered investors returns exceeding 15% over the course of the past three months. The firm was one of the first to develop a vaccine for the coronavirus and has been working on medicines for other diseases as well. In addition to marketing pharma, the firm also offers specialty care physicians and primary care through representative offices.
On June 7, news agency Reuters reported that AstraZeneca PLC (NASDAQ: AZN) had signed a deal with British firm NetScientific to commercialize the COVID-19 test developed by the former, giving the pharma company royalty rights on future sales of the product.
At the end of the first quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $2.6 billion in AstraZeneca PLC (NASDAQ: AZN), down from 41 in the previous quarter worth $2.9 billion.
Just like Alibaba Group Holding Limited (NYSE: BABA), Baidu, Inc. (NASDAQ: BIDU), and NIO Inc. (NYSE: NIO), AstraZeneca PLC (NASDAQ: AZN) is one of the best ADR stocks to buy In 2021.
In its Q4 2020 investor letter, Baron Health Care Fund, an asset management firm, highlighted a few stocks and AstraZeneca PLC (NASDAQ: AZN) was one of them. Here is what the fund said:
“AstraZeneca PLC is a multinational pharmaceutical company developing drugs across multiple therapeutic areas such as oncology and respiratory diseases. Shares were impacted by news of AstraZeneca’s joint development with Oxford University of a viral-based COVID-19 vaccine. Given a mixed data set due to an unforeseen error in dosing that occurred in the Brazilian market, the vaccine timelines slipped, hurting share performance. Our investment thesis on AstraZeneca is not dependent on COVID-19 but rather its best-in-class large-cap growth profile, and we retain conviction.”
7. Vale S.A. (NYSE: VALE)
Number of Hedge Fund Holders: 31
Vale S.A. (NYSE: VALE) is a Brazil-based company in the metals and mining business. It was founded in 1942 and is ranked seventh on our list of 10 best ADR stocks to buy In 2021. The stock has returned over 100% in returns over the past year. In addition to mining copper, gold, silver, and other metals, as well as coal, the firm also provides logistical services related to these products. It is one of the largest companies in Brazil and the largest iron ore producer in the world. It has a market cap of over $113 billion.
On June 8, Vale S.A. (NYSE: VALE) announced that it would be paying close to $2.5 billion to settle liabilities related to a mining project in Mozambique that would speed up an exit from the coal industry for the mining firm.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Vale S.A. (NYSE: VALE) with 38 million shares worth more than $661 million.
Just like Alibaba Group Holding Limited (NYSE: BABA), Baidu, Inc. (NASDAQ: BIDU), and NIO Inc. (NYSE: NIO), Vale S.A. (NYSE: VALE) is one of the best ADR stocks to buy In 2021.
6. Pinduoduo Inc. (NASDAQ: PDD)
Number of Hedge Fund Holders: 56
Pinduoduo Inc. (NASDAQ: PDD) is a China-based technology firm that runs an ecommerce platform which caters to the agriculture industry. It was founded in 2015 and is placed sixth on our list of 10 best ADR stocks to buy In 2021. The company’s shares have offered investors returns exceeding 72% over the past twelve months. Some of the products sold by the online marketplace include fresh produce, food, beverages, clothes, household goods, personal care items, and electronics, among others.
On May 26, Pinduoduo Inc. (NASDAQ: PDD) posted earnings results for the first fiscal quarter, reporting a revenue of $3.3 billion, up 267% year-on-year and beating market predictions by $180 million. Sales and marketing spending during the period was up 78%.
At the end of the first quarter of 2021, 56 hedge funds in the database of Insider Monkey held stakes worth $6.2 billion in Pinduoduo Inc. (NASDAQ: PDD), up from 54 in the preceding quarter worth $10.5 billion.
Just like Alibaba Group Holding Limited (NYSE: BABA), Baidu, Inc. (NASDAQ: BIDU), and NIO Inc. (NYSE: NIO), Pinduoduo Inc. (NASDAQ: PDD) is one of the best ADR stocks to buy In 2021.
In its Q1 2021 investor letter, Tao Value, an asset management firm, highlighted a few stocks and Pinduoduo Inc. (NASDAQ: PDD) was one of them. Here is what the fund said:
“Pinduoduo reported a strong quarter, reporting MAU of 720 million, now surpassing Taobao. However, it was overshadowed by a bigger news on Colin Huang resigning from Board and completely disassociating himself from PDD’s management & operation. Huang explained in his letter to shareholders that he would start fundamental research initiatives in food science. Although not entirely shocked (as he already stepped down from CEO July 2020), I am surprised by the fast pace of such transition. I remain confident in the organization and the culture Huang built but will monitor it closely.”
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Disclose. None. 10 Best ADR Stocks to Buy in 2021 is originally published on Insider Monkey.
