3 Undervalued International Stocks for US Investors
The ADRs of these wide-moat companies are attractive buys today.
Susan Dziubinski: Hi, I’m Susan Dziubinski, co-host of The Morning Filter podcast. On a recent episode, Morningstar Chief US Market Strategist Dave Sekera discussed the pros and cons of investing in American depository receipts, or ADRs. ADRs provide US investors with a way to get exposure to non-US companies without having to trade directly on a foreign stock exchange.
In today’s bonus stock pick segment, we’re focusing on three ADRs that look attractive today. All of these ADRs are from wide-moat companies abroad, and all are trading well below what Morningstar’s analysts think they’re worth.
3 Undervalued International Stocks for US Investors
Our first undervalued ADR for US investors is AstraZeneca. Based in the UK, this drugmaker has dug a wide economic moat thanks to its patents, economies of scale, and a powerful distribution network. Morningstar thinks Astra’s pipeline is one of the strongest in the drug group and that the company is developing several key products with blockbuster potential. In particular, the firm’s portfolio of cancer drugs is well positioned based on leading efficacy in hard-to-treat cancers, and they carry strong pricing power and provides higher-margin sales. Astra also competes well in the respiratory and diabetes spaces, although these areas typically have less pricing power. We think Astra’s ADRs are worth $184.
Read Morningstar’s full report on AstraZeneca.
Our second attractive ADR to buy is ASML. ASML is based in the Netherlands. The company makes the machines that manufacturers use to make advanced computer chips, and its largest clients include Taiwan Semiconductor, Intel, and Samsung. While ASML sells equipment at an attractive gross margin, it then keeps generating recurring service revenue for decades. AI is driving strong semiconductor demand, which means more demand for ASML’s machines, too. The company’s economic moat is supported by three moat sources, including intangible assets, cost advantages, and switching costs. We assign the company’s ADRs a $2,050 fair value estimate.
Read Morningstar’s full report on ASML.
Our final international stock to buy for US investors is Taiwan Semiconductor Manufacturing. Taiwan Semiconductor is the world’s largest contract chipmaker. The company’s wide moat stems from economies of scale and premium pricing that’s justified by its cutting-edge process technologies. In the face of strong AI demand, the company recently raised its 2026 capital expenditure spending to $62 billion at the midpoint and increased its full-year revenue growth target by more than 40% in US dollars. We expect the company to hike prices in 2027 due to higher raw material costs and tight supply. We think Taiwan Semi’s ADRs are worth $534.
Read Morningstar’s full report on Taiwan Semiconductor Manufacturing.
For more stock ideas, be sure to tune in to The Morning Filter each week wherever you get your podcasts and visit morningstar.com, too.
Morningstar senior analysts Javier Correonero, Jay Lee, and Phelix Lee provided the research behind this segment.
Watch 3 Overvalued Stocks to Avoid in September for more from Susan Dziubinski.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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