In this article, we discuss the 5 best ADR stocks to buy In 2021. If you want to read our detailed analysis of these stocks, go directly to the 10 Best ADR Stocks to Buy in 2021.
5. JD.com, Inc. (NASDAQ: JD)
Number of Hedge Fund Holders: 75
JD.com, Inc. (NASDAQ: JD) is a China-based ecommerce firm. It was founded in 1998 and is ranked fifth on our list of 10 best ADR stocks to buy In 2021. The company’s shares have returned more than 20% to investors over the course of the past twelve months. The company operates close to 900 warehouses across the world to aid the online marketplace. The firm owns the largest ecommerce platform in China in terms of revenue. The company registered a massive boom in sales numbers during the coronavirus lockdowns last year.
On May 28, JD.com, Inc. (NASDAQ: JD) launched JD Logistics in Hong Kong. JD Logistics had earlier raised $3.1 billion in the second-largest initial public offering in Hong Kong this year, finishing the first day of trading with an intraday high of 18%.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in JD.com, Inc. (NASDAQ: JD) with 51.6 million shares worth more than $4.3 billion.
In its Q1 2021 investor letter, Arisaig Partners, an asset management firm, highlighted a few stocks and JD.com, Inc. (NASDAQ: JD) was one of them. Here is what the fund said:
“Our largest holding as a firm, JD.com, we expect to grow earnings at an annualised rate of 30% over the next five years, implying it will trade on an EV / EBITDA of 7.5x at the end of this period. Is this a growth stock or a value stock? Does anyone care? Do these labels really matter?
For the Asia Fund, with a higher pre-existing allocation to our core FMCG holdings coming into the year, we took advantage of capital market volatility to further concentrate on our highest conviction names. JD.com has been the main destination for our limited reallocations as evidence continues to emerge supporting our thesis that the company has a strong right-to-win in the large and highly fragmented USD1.8th Chinese grocery market. We have also been encouraged by the fact that after years of persistence, the company is beginning to engage with us on ESG issues (we have specifically discussed data protection, climate change and the circular economy). ESG is now being considered at the board level, and specific sustainability reporting should follow in the coming months. Having long displayed a healthy obsession with customer service, we interpret these latest conversations as a sign that JD is beginning to develop a more sophisticated understanding of its impact on all stakeholders.”
4. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
Number of Hedge Fund Holders: 76
Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is a Taiwan-based semiconductor manufacturer founded in 1987. It is placed fourth on our list of 10 best ADR stocks to buy In 2021. The company’s shares have returned more than 103% to investors over the past year. The stock has climbed steeply in recent weeks as global supply chain issues drive up the prices of semiconductor chips and lead to a shortage that is expected to last for several months.
On June 1, Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) announced at an annual gathering that it was on track to begin volume production of 5nm chips, already approved for usage in artificial intelligence products, at a chip fabrication plant in Arizona by 2024.
At the end of the first quarter of 2021, 76 hedge funds in the database of Insider Monkey held stakes worth $10.8 billion in Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), up from 72 in the preceding quarter worth $11.8 billion.
In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted a few stocks and Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) was one of them. Here is what the fund said:
“Taiwan Semiconductor is the world’s largest outsourced foundry of logic semiconductor chips. TSMC’s shares appreciated 8.9% during the quarter.
Similar to last quarter, the supply-demand imbalance in semiconductor chips continues to benefit TSMC. To fuel new technological advances and meet the current supply imbalance, we see significantly increased capital spending across the industry over the coming years.
TSMC has an extraordinary track record of return on these large investments despite their rapid historical cadence of expansion. I remain hopeful that the large capital expenditure plan they now have ($100 billion of investment over the next three years) will be money well spent and not lead to industry oversupply in the medium term. Hopefully, future returns on these investments will look as good as those of the past.”
3. NIO Inc. (NYSE: NIO)
Number of Hedge Fund Holders: 28
NIO Inc. (NYSE: NIO) is a Shanghai-based automobile manufacturer. It was founded in 2014 and is ranked third on our list of 10 best ADR stocks to buy In 2021. The company has gained prominence in recent years as one of the premier electric vehicle makers in China, quite possibly the largest new energy vehicle market in the world. The company makes and sells electric vehicles in the United Kingdom, Germany, and the United States in addition to China. It markets electric SUVs and smart electric sedans.
On June 1, investment advisory Citi upgraded NIO Inc. (NYSE: NIO) stock to Buy from Neutral with a price target of $58.30 on the back of increasing demand for electric vehicles in the latter part of April after a lean spell through the preceding few weeks.
At the end of the first quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in NIO Inc. (NYSE: NIO), down from 34 in the preceding quarter worth $2.6 billion.
In its Q2 2020 investor letter, McLain Capital, an asset management firm, highlighted a few stocks and NIO Inc. (NYSE: NIO) was one of them. Here is what the fund said:
“Nio, Inc. (NIO): It’s stock up 360% since the beginning of June on no news, and one of our more troublesome short positions, the Chinese electric vehicle manufacturer is valued at a whopping $17bln on trailing revenue of only $1.1bln. In 2019, the business ran a -17% gross margin, a -140% EBITDA margin & burned ~$1.5bln in cash in 2019. The stock has become one of the most popular stocks among retail traders with approximately 250,000 accounts holding the name just on the popular Robinhood trading platform.”
2. Alibaba Group Holding Limited (NYSE: BABA)
Number of Hedge Fund Holders: 135
Alibaba Group Holding Limited (NYSE: BABA) is a China-based multinational technology company primarily in the ecommerce business. It was founded in 1999 and is placed second on our list of 10 best ADR stocks to buy In 2021. Over the years, Alibaba has expanded from the core retail business to cloud computing, digital media and entertainment, internet-based health platforms, financial services, and logistics, among others. It has a market cap of over $580 billion and posted more than $109 billion in annual revenue in the previous fiscal year.
Alibaba Group Holding Limited (NYSE: BABA) stock has taken a beating in recent weeks as the Chinese government cracks down on dual listed companies. On April 30, the firm froze pay for senior executives and raised the salaries of junior staff in a move aimed at boosting morale.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE: BABA) with 13.9 million shares worth more than $3.1 billion.
In its Q1 2021 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE: BABA) was one of them. Here is what the fund said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
1. Baidu, Inc. (NASDAQ: BIDU)
Number of Hedge Fund Holders: 89
Baidu, Inc. (NASDAQ: BIDU) is a Beijing-based multinational technology company with stakes in several businesses, including internet-related services, artificial intelligence, and digital advertisements, among others. It was founded in 2000 and is ranked first on our list of 10 best ADR stocks to buy In 2021. The company’s shares have offered investors returns exceeding 59% over the course of the past twelve months. Baidu is one of the largest internet companies in China and owns the premier search engine in the country.
On May 19, investment advisory Daiwa boosted the revenue forecasts of Baidu, Inc. (NASDAQ: BIDU) for 2021 by 2% on the back of expectations that the artificial intelligence and cloud-based services business of the company would contribute more than expected to the overall earnings.
At the end of the first quarter of 2021, 89 hedge funds in the database of Insider Monkey held stakes worth $6.5 billion in Baidu, Inc. (NASDAQ: BIDU), up from 51 in the preceding quarter worth $4.6 billion.
In its Q1 2021 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Baidu, Inc. (NASDAQ: BIDU) was one of them. Here is what the fund said:
“We have also fully exited our stake in Baidu, following their outstanding performance during the period and their lower relative upside potential compared to other investment alternatives, which we will discuss below.
The Chinese technology platform company Baidu has also been held in the portfolios managed by Alejandro, Miguel and myself for several years. During this period, we have seen very high volatility in its share price, which we have taken advantage of to make significant rebalancing moves in our position (in fact, we even sold our entire position once, when we thought the stock’s upside potential was exhausted). After several years of instability, market sentiment turned very positive, putting an end to the historical advertising problems in the healthcare sector, the divestments in O2O (Online-to-Offline) businesses that continued to weigh on the company’s margins, the IPO of part of the iQiyi streaming business (which hid Baidu’s underlying cash generation capacity) and the tough competition from other industry giants such as Tencent and Alibaba, as well as the entry of new players with disruptive business models (ByteDance). At the same time, the company’s recent commitment to electric vehicles contributed even more to this change of narrative. Baidu’s share price rose almost fourfold from the March 2020 lows to all-time highs and reached a valuation where the margin of safety, in our view, was too narrow.”
You can also take a peek at Billionaire Stan Druckenmiller’s Top 10 Stock Picks and Billionaire Julian Robertson On Interest Rates and His Top Stock Picks For 2021.
