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.
7. TotalEnergies SE (NYSE:TTE)
Forward Price to Earnings Ratio: 8.06
Number of Hedge Fund Holders: 26
TotalEnergies SE (NYSE:TTE) is one of the Most Undervalued Foreign Stocks to Buy Now. On May 12, Morgan Stanley raised the price target on TotalEnergies SE (NYSE:TTE) from EUR 88.3 to EUR 89.1, while maintaining an Overweight rating on the shares. More recently, on May 18, TD Cowen upgraded the stock from Hold to Buy and raised the price target from $66 to $97.
The ratings follow TotalEnergies fiscal Q1 2026 earnings reported on April 29. During the quarter, the company posted strong earnings. The adjusted net income reached $5.4 billion, reflecting a 29% year-on-year growth and ahead of analyst expectations of $5 billion. A report by Reuters noted that the results were driven largely by the ongoing Iran war, which has sent global energy prices soaring, with Brent crude reaching near $120 a barrel.
The report by Reuters highlighted that while the US-Iran conflict has disrupted the company’s operations by forcing it to shut down 15% upstream output, the higher prices across all business segments has more than offset this loss. The most notable segment for the company was its refining and chemicals, which surged five fold to $1.6 billion, driven by strong trading activity.
As a result, the company raised its dividend by 5.9% and doubled share buybacks to $1.5 billion for Q2. This reflects a reversal from its cautious stance in late 2025, when low oil prices had prompted cost-cutting.
TotalEnergies SE (NYSE:TTE) is a global multi-energy company that produces and markets oil, biofuels, natural gas, renewables, and electricity.
6. Rio Tinto Group (NYSE:RIO)
Forward Price to Earnings Ratio: 12.4
Number of Hedge Fund Holders: 38
Rio Tinto Group (NYSE:RIO) is one of the Most Undervalued Foreign Stocks to Buy Now. On May 15, Liam Fitzpatrick from Deutsche Bank raised the firm’s price target on Rio Tinto Group (NYSE:RIO) from 6,200 GBp to 6,900 GBp, while maintaining a Hold rating on the shares.
The company had reported its first quarter 2026 production and operations review on April 21, and the stock has gained more than 3% since the release. During the quarter, the company’s flagship Pilbara iron ore operations posted second highest first quarter production since 2018. The production rose 13%, driven by improved productivity and fewer weather related disruptions. Moreover, the Iron ore sales also grew 2.4% year-over-year to 72.4 million metric tons. Despite the growth, sales fell short of Visible Alpha consensus estimates of 74.6 million metric tons. However, management maintained a full-year Pilbara sales forecast of 323–338 million tons.
The report by Reuters noted that on the cost side, higher diesel prices have added pressure, though management says its scale and global supply-chain leverage have kept its cost position resilient. The bigger concern lies in the second half of the year, where jet fuel and diesel shortages are seen as the key operational risk. These could affect equipment, logistics, and the movement of personnel to remote mining sites.
Rio Tinto Group (NYSE:RIO) is one of the most diversified mining groups globally, with operations spanning iron ore, copper, aluminum, lithium, and other critical minerals. Headquartered in London and operating as a dual-listed company with Rio Tinto plc in London and Rio Tinto Ltd in Melbourne, the company traces its origins to 1873. Its scale, geographic diversity, and low-cost asset base have made it one of the most durable names in the global resources sector.
While we acknowledge the potential of RIO to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than RIO and that has 100x upside potential, check out our report about the cheapest AI stock.
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