ADR stands for American Depository Receipt, which is a certificate that lets investors invest in a foreign company on U.S. stock markets.
ADRs are sponsored by banks and brokerage firms in the U.S.
An ADR may represent one or more shares of the foreign stock. But if the stock is expensive, it may represent a fraction of a share. That way, the ADR will start trading at a moderate price, or be in range of similar stocks on the exchange where it trades. The price usually stays close to the price of the foreign stock in its home market.
ADRs make it practical for increasingly global-minded investors to invest in foreign companies, despite language barriers, shifting foreign exchange rates and the difficulty of trading on a foreign stock market.
Foreign firms benefit from ADRs by letting companies offer dollar-denominated shares and raise capital in the U.S. Issuing ADRs also raises a non-U.S. firm’s liquidity and visibility in the United States and around the world.
Depositary banks that issue ADRs sometimes charge fees for their services, and deduct these fees from the dividends and other distributions on the ADRs. The depositary bank also incurs expenses for services such as converting foreign currency into U.S. dollars, and passes these costs on to ADR holders.
We believe most investors could benefit from holding some foreign investments in their portfolios for added diversification—and that ADRs are a good way to do it.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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DIAGEO PLC ADR $169 is a hold. The company (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 562.5 million; Market cap: $95.1 billion; Price-to-sales ratio: 4.4; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.diageo.com) is a leading maker of premium alcoholic beverages.
In the fiscal… Read More
Commodities can help diversify portfolios, but are cyclical and come with high levels of price volatility.
However, well-diversified ETFs that offer exposure to commodity producers can help investors overcome the problems associated with direct investments in physical commodities, or funds that track a single commodity.
Below, we… Read More
SHERWIN-WILLIAMS CO. $281 is a hold. The maker of paints for consumers and industrial users (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 258.0 million; Market cap: $72.5 billion; Price-to-sales ratio: 3.2; Dividend yield: 0.9%; TSINetwork Rating: Above Average; www.sherwin-williams.com) reported 6.3% higher sales in… Read More
HONDA MOTOR CO. LTD. ADRs $31 is a buy. The Japanese automaker (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $52.7 billion; Price-to-sales ratio: 0.4; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.honda.com) sold 947,000 cars in its fiscal… Read More
PHILIPS ELECTRONICS N.V. ADRs $21 is a hold. The company (New York symbol PHG; Conservative Growth Portfolio, Manufacturing sector; ADRs outstanding: 881.5 million; Market cap: $18.5 billion; Price-to-sales ratio: 0.9; Dividend yield: 4.4%; TSINetwork Rating: Average; www.philips.com) makes industrial health-care products, including X-ray scanners and ultrasound systems, along… Read More
SHERWIN-WILLIAMS CO. $215 (www.sherwin-williams.com) remains a hold. The company is a leading maker of paints and varnishes. Due to rising interest rates, which will slow sales of existing homes, and rising labour costs, the company expects its earnings will decline from $8.73 a share in 2022 to between… Read More
SONY GROUP CORP. ADRs $88 is a hold. The Japanese conglomerate (New York symbol SONY; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.3 billion; Market cap: $114.4 billion; Price-to-sales ratio: 1.4; Dividend yield: 0.6%; TSINetwork Rating: Average; www.sony.com) reported 1.3% lower sales in its fiscal 2023… Read More
A great way to improve your international exposure is to buy high-quality firms that trade on the New York Stock Exchange as American Depositary Receipts (ADRs). Here are three of our favourites (including Sony—see box). Note, however, that we see only one of them as… Read More
Prices for commodities such as crude oil, iron ore and copper have weakened lately as investor fear rising interest rates will trigger an economic slowdown. Even so, we continue to recommend all investors maintain exposure to resources as the sector’s high-quality producers will still gain… Read More
SOFTBANK GROUP CORP. ADR $18 is a hold. Based in Japan, the company (Over-the-counter Pink Sheets symbol SFTBY; ADRs outstanding: 3.45 billion; Market cap: $62.1 billion; Divd. yield: 0.9%; Takeover Target Rating: Medium; www.softbank.jp) is a conglomerate with holdings in the communications, banking and technology industries.
SoftBank is now preparing… Read More
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Changes to this Policy
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