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 ASML Holding N.V. (NASDAQ:ASML) 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.
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.
A technician in a clean room working on a semiconductor device, illuminated by the machines.
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).
ASML Holding N.V. (NASDAQ:ASML) is a Dutch company that designs and manufactures photolithography machines, that are used in semiconductor production companies to create chips. The company is one of the most exclusive suppliers of Extreme Ultraviolet (EUV) lithography machines. ASML Holding N.V. (NASDAQ:ASML) earns revenue through equipment sales and servicing agreements with top semiconductor manufacturers like TSMC, Intel, and Samsung.
The growing demand for smaller and more efficient semiconductor devices is driving the robust growth of the EUV lithography market. These chips are integral to a wide array of modern electronics, including smartphones, computers, and numerous other devices, where high performance and compact design are increasingly vital.
ASML Holding N.V. (NASDAQ:ASML) is well-positioned to capitalize on the growing demand for advanced semiconductors, driven by the increasing adoption of artificial intelligence (AI) and the Internet of Things (IoT). The company's EUV lithography technology is instrumental in advancing Moore's Law, enabling continuous miniaturization and performance improvement of semiconductors. According to Khaveen Investments, ASML Holding N.V. (NASDAQ:ASML) has an estimated 83% market share in Extreme ultraviolet (EUV) lithography systems. and its proprietary EUV technology is expected to drive growth in the double-digit range between 2025 and 2030.
Overall, ASML ranks 8th on our list of best ADR stocks to invest in according to analysts. While we acknowledge the potential of ASML 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 ASML but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
