In this article, we will look at the 9 Most Undervalued Foreign Stocks to Buy Now.
On May 20, Alastair Pinder, Head EM and Global Equity Strategist at HSBC appeared on a CNBC Television interview. Pinder focuses on emerging markets such as those in Latin America. He is particularly overweight on the Brazilian Market and believes that higher inflation and commodity prices are a positive sign for emerging markets such as Brazil, because surging prices for crude oil, iron ore, and agriculture drastically boost corporate profits and government revenue.
Pinder also highlighted that emerging markets are also one of the key beneficiaries of AI and tech. He noted that DRAM and semiconductors are also commodities and the recent price hike in memory and semiconductor chips is set to benefit technology players in emerging markets. He highlighted that the Asia tech space is one of the best playbooks to invest in the AI theme mainly due to the cheaper and more attractive valuations of tech companies in emerging markets.
With that, let’s take a look at the 9 Most Undervalued Foreign Stocks to Buy Now.
Our Methodology
To curate the list of Most Undervalued Foreign Stocks to Buy Now, we used the Finviz stock screener, Seeking Alpha, and Insider Monkey’s hedge fund database. Using the screener, we aggregated a list of ex-US stocks that are trading below the forward price to earnings ratio of 15. Lastly, after cross-checking the valuations from Seeking Alpha we ranked the stocks in ascending order of the number of hedge fund holders.
Why are we interested in the stocks that hedge funds pile into? 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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
9 Most Undervalued Foreign Stocks to Buy Now
9. Toyota Motor Corporation (NYSE:TM)
Forward Price to Earnings Ratio: 10.1
Number of Hedge Fund Holders: 20
Toyota Motor Corporation (NYSE:TM) is one of the Most Undervalued Foreign Stocks to Buy Now. On May 14, Freedom Broker upgraded Toyota Motor Corporation (NYSE:TM) from Hold to Buy and raised the price target from $221 to $230. The analyst noted that the company appears to be adopting the new operating environment and expects the company to show signs of recovery in its financial performance.
Recently, on May 8, the company posted its fiscal Q4 2026 earnings. During the quarter, the company reported roughly 50% decline in quarterly earnings and expects full-year profits to decline by about a fifth. The report highlighted that most of this damage is due to higher material costs, followed by delivery delays and weaker sales volumes. Moreover, the increase in prices is also impacting everything from fuel to transportation and paints used at the assembly plants.
Despite these pressures, Toyota sees a bright spot in hybrid vehicles, with sales expected to surpass 5 million units for the first time. On the same day, Reuters reported that Toyota has warned that the ongoing Iran war is expected to cost around $4.3 billion in the current financial year. According to Reuters this is one of the starkest warnings issued by any global company related to the US-Iran conflict.
Toyota Motor Corporation (NYSE:TM) is a global leader in the automotive industry, designing, manufacturing, and selling a wide range of passenger cars, trucks, and commercial vehicles under the Toyota, Lexus, and Daihatsu brands.
8. HSBC Holdings plc (NYSE:HSBC)
Forward Price to Earnings Ratio: 10.39
Number of Hedge Fund Holders: 25
HSBC Holdings plc (NYSE:HSBC) is one of the Most Undervalued Foreign Stocks to Buy Now. On May 14, Morgan Stanley raised its price target on HSBC Holdings plc (NYSE:HSBC) from 1,419 GBp to 1,463 GBp and maintained an Equal Weight rating on the stock.
The raised price target comes despite recent challenges for the bank. The company released its fiscal Q1 2026 earnings report on May 5. During the quarter, the bank posted pretax profit of $9.4 billion, below the estimates of $9.5 billion and the $9.59 billion average of broker estimates compiled by the bank. The bank also revised its 2026 credit loss forecast upward to 45 basis points of average gross loans from 40 basis points, citing an uncertain outlook.
According to a Reuters report published on the earnings day, HSBC’s results performed poorly against European rivals as Deutsche Bank posted record quarterly profits, and UBS beat forecasts on strong trading. Analysts at Citi noted that the bank’s wealth business growth of 18% during the quarter also lagged behind Standard Chartered’s 32% growth.
The same report also noted that HSBC reported an unexpected $400 million loss related to the collapse of British mortgage lender Market Financial Solutions (MFS). The loss stemmed from HSBC’s lending to Apollo-backed firm Atlas SP, which had significant exposure to MFS before it collapsed amid fraud allegations. Reuters highlighted that the incident has intensified regulatory scrutiny of banks’ involvement in the $3.5 trillion private credit industry. As a result, regulators in the US, UK, and Canada have all launched reviews, while the US Federal Reserve and Treasury Department have also flagged concerns.
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