We recently published a list of 12 Best ADR Stocks To Invest In According to Analysts. In this article, we are going to take a look at where Novo Nordisk A/S (NYSE:NVO) stands against the other best ADR stocks to invest in.
An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank, representing shares of a foreign company. ADRs enable U.S. investors to purchase shares in foreign companies as if they were U.S. stocks, simplifying the process. This makes it easier for Americans to invest internationally and helps foreign companies attract U.S. investors without the complexities of directly listing on U.S. stock exchanges.
Despite the advantages, fewer than 10% of large foreign companies list in the U.S., due to high valuations of some companies which reduce the need for a U.S. listing. Additionally, many foreign firms are often family-owned and resist listing due to concerns about losing control or compromising personal financial benefits.
READ ALSO: 12 Best Stocks to Invest in for the Next 3 Months and Top 8 Stocks To Buy In 8 Different Sectors for the Next 3 Months.
Global Markets React to Trump Era
The recent victory of Donald Trump in the U.S. presidential election is poised to have significant repercussions on global markets, particularly affecting stocks in Europe, the UK, China, and Canada. Analysts from Bloomberg, Yahoo, and CNBC have provided insights into how these regions might respond to Trump’s policies and market dynamics.
European markets are generally expected to suffer under a Trump presidency. Emmanuel Cau, head of European Equity Strategy at Barclays, suggests that Europe may be viewed as a “loser” in this scenario due to Trump’s protectionist trade policies and potential tariffs that could disrupt existing trade relationships. Trump’s historical stance on climate change and environmental regulations could also lead to increased competition for European firms, particularly in energy sectors where U.S. companies may benefit from deregulation. Goldman Sachs analysts have echoed these concerns, forecasting that Trump’s administration could create an unfavorable environment for European stocks, particularly those reliant on exports to the U.S.
For the UK, the implications of a Trump presidency are mixed but lean towards caution. Bloomberg reported that an aggressively competitive U.S. market risks exacerbating existing economic stagnation in Britain. The UK’s reliance on trade with the U.S. makes it particularly vulnerable to shifts in U.S. policy, especially if Trump pursues aggressive tariffs or trade barriers. Additionally, the uncertainty surrounding Brexit negotiations may further complicate the UK’s economic landscape under a Trump administration.
China is likely to face direct challenges from Trump’s trade policies, which may include increased tariffs on Chinese goods. Trump’s statements indicate a willingness to impose significant tariffs on imports from China as part of his broader strategy to address trade imbalances and intellectual property concerns. This approach could lead to volatility in Chinese stock markets as investors react to potential retaliatory measures from Beijing and shifts in global supply chains. The anticipated increase in tariffs could also affect sectors heavily reliant on exports to the U.S., leading to decreased profitability for many Chinese companies.
In contrast to Europe and China, Canadian stocks may experience a long-term boost from Trump’s victory, despite an initial negative reaction post-election. Analysts at Bay Street believe that sectors such as commodities and natural resources could benefit from Trump’s pro-energy policies and potential deregulation efforts despite tariffs. However, there are concerns regarding Trump’s proposed tariffs on Canadian imports, which could disrupt trade relations between the two countries.
As the global market continues to navigate the implications of the Trump presidency, investors are faced with both challenges and opportunities. The potential for increased tariffs, trade barriers, and deregulation efforts has created a complex landscape for foreign companies. Despite the uncertainty, there are still many foreign companies that offer attractive investment opportunities for U.S. investors.
An elderly couple receiving insulin from a pharmacist, representing healthcare company’s successful pharmaceutical products.
Our Methodology
For this article, we used the Finviz and Yahoo Finance stock screener to find the 30 largest foreign companies listed in the United States. We then sourced the analysts’ average price targets and picked the 12 stocks that had the highest upside potential, as of November 27. The list is sorted in ascending order of analysts’ average upside potential.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Novo Nordisk A/S (NYSE:NVO)
Upside Potential: 39.74%
Novo Nordisk A/S (NYSE:NVO) is a global healthcare company based in Denmark, specializing in diabetes care, obesity treatment, and hormone replacement therapies. The company is known for prescription medications such as insulin, GLP-1 receptor agonists, and obesity management drugs such as Wegovy and Ozempic.
In the first nine months of 2024, Novo Nordisk A/S (NYSE:NVO) achieved 24% sales growth and 22% operating profit growth from the previous year, driven by the rising demand for its GLP-1-based diabetic and obesity medicines. The company’s GLP-1 treatments have expanded to cover three times more patients compared to three years ago, with GLP-1 volume market share increasing to 65% in 3 years.
Novo Nordisk A/S (NYSE:NVO) is also focused on expanding its product offering and growing its market share through innovation. The company’s recent phase 1 clinical trial results for its new experimental obesity drug, Amycretin, have shown promising results, with a 13.1% average weight loss after 12 weeks. This achievement surpasses the efficacy of its existing weight-loss drug, Wegovy, and outperforms other experimental treatments in the market.
According to Artisan Partners, Novo Nordisk A/S (NYSE:NVO) has the best obesity/Type 2 diabetes pipeline in the industry, which bodes well for the company’s future growth prospects. As the company continues to innovate and expand its product offerings, it is likely to attract more patients and healthcare providers, driving revenue growth and solidifying its position as a leader in the diabetes care market.
Overall, NVO ranks 1st on our list of best ADR stocks to invest in according to analysts. While we acknowledge the potential of NVO to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
