International stocks are the stocks of companies based outside the U.S. and can help strengthen your portfolio through diversification and creating new avenues to explosive growth. Many investors should consider allocating a percentage of their portfolios to stocks in international markets.
Top 5
Top 5 international stocks in 2025
1. ASML Holding
Headquartered in the Netherlands, ASML Holding (ASML 5.68%) is one of the world's leading providers of semiconductor manufacturing equipment. Semiconductors extend beyond powering computers and mobile devices and providing the hardware foundations for big leaps forward in artificial intelligence.
Semiconductors are now essential components for automobiles, appliances, and a wide range of everyday products and services. And access to chip supplies is a major national security issue for countries around the world.
As a result, there's a big push for localized chip production in the U.S., Europe, and other major markets. ASML's extreme ultraviolet lithography (EUV) machines are unmatched when it comes to manufacturing state-of-the-art chips. The company is set to play a big role in expanding global manufacturing capacity.
2. CD Projekt
Based in Poland, CD Projekt (OTGL.Y -0.57%) has established itself as a strong player in the video game industry. The company is best known for games such as The Witcher and Cyberpunk 2077, but it also operates an online marketplace and sharing platform for digitally distributing games.
Demand for interactive entertainment is still poised for huge growth over the long term. CD Projekt has compelling opportunities as it releases content expansions for existing titles, launches new properties, and taps into emerging trends, including augmented reality and the metaverse.
Metaverse
3. MercadoLibre
MercadoLibre (MELI 0.13%) is a leading provider of e-commerce and fintech services in Latin America. The company was founded in Argentina and is still growing quickly there, but it actually does most of its business in Brazil and generates a major portion of its revenue in Mexico.
MercadoLibre has continued to increase sales rapidly despite macroeconomic headwinds, and it's actually making a big hiring push at a time when many other businesses are reducing their employee counts. MercadoLibre's forefront positions in online retail and fintech point to huge expansion potential as these services become more popular in Latin America.
4. Shoprite Holdings
The United Nations predicts Africa will account for more than half of global population growth through 2050, and Shoprite Holdings' (SRGH.Y 0.54%) status as that continent's largest grocery chain positions it to benefit from economic and demographic tailwinds. The company is headquartered in South Africa and operates more than 3,600 locations across 14 countries.
5. HDFC Bank
India's largest private sector lender, HDFC Bank (HDB 0.01%), is in a favorable position to benefit as the country's economy continues to develop. The company has more than 7,800 bank branches across more than 3,800 cities and towns. HDFC is also a player in the digital payments space and appears poised to benefit from "the war on cash."
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| ASML (NASDAQ:ASML) | $320 billion | 0.88% | Semiconductors and Semiconductor Equipment |
| CD Projekt (OTC:OTGL.Y) | $7 billion | 0.39% | Entertainment |
| MercadoLibre (NASDAQ:MELI) | $119 billion | 0.00% | Multiline Retail |
| Shoprite (OTC:SRGH.Y) | $9 billion | 2.47% | Food and Staples Retailing |
| HDFC Bank (NYSE:HDB) | $179 billion | 1.07% | Banks |
Should I invest?
Pros and cons of investing in international stocks
Pros
- Foreign markets present opportunities you miss if your holdings are strictly limited to U.S.-based stocks.
- International stocks allow investors to diversify and gain exposure to growth in other countries.
- While foreign companies sometimes come with added risks, international companies tend to have lower price-to-sales (P/S) and price-to-earnings (P/E) multiples relative to comparable businesses in the U.S.
- Many investors prefer to pay more for domestic stocks, and that can result in potentially explosive international stocks trading at discounted valuations.
Cons
- Business growth in international markets is generally considered less reliable than growth for U.S.-based businesses.
- International stocks tend to receive less coverage from U.S. analysts and media outlets, which can result in weaker valuation performance even when business results are strong.
- International companies can face outsized macroeconomic and geopolitical risks.
- In some cases, investing in international stocks means that investors have to embrace high levels of risk related to lower levels of financial visibility and the trustworthiness of reported results.
Political instability is a risk to weigh when investing internationally.
Foreign trade in U.S.
How can I trade foreign stocks in the U.S.?
As an American, you can gain portfolio exposure to international stocks in a few ways.
Invest in internationally focused funds
The easiest (and perhaps safest) way to invest in foreign stocks is through exchange-traded funds (ETFs) or mutual funds that include non-domestic companies.
Buying shares of a fund, such as the Vanguard FTSE Europe ETF (VGK 0.59%), gives you a position in more than 1,300 companies on the continent, while the iShares MSCI Emerging Markets ETF (EEM 0.64%) confers exposure to more than 1,200 large and mid-size companies from countries such as China, India, Brazil, South Korea, and South Africa.
Alternatively, the iShares Semiconductor ETF (SOXX 0.44%) mostly comprises U.S. companies, but Taiwan Semiconductor Manufacturing (TSM 0.25%) stock is one of its biggest components. The fund also includes foreign chipmakers ASML Holding and NXP Semiconductors (NXPI 0.21%), among others.
Buy American depositary receipts
Some foreign companies list their stocks on U.S. exchanges in addition to their home markets. In that case, you can simply purchase shares on the Nasdaq or the New York Stock Exchange (NYSE) through domestic brokerages, just as you would for a U.S.-based company.
These shares will usually be in the form of American depositary receipts (ADRs) and represent equity stakes equivalent to a predesignated number of shares of the company's core stock on its home exchange.
You may also be able to buy ADR stakes in companies that don't trade on U.S. exchanges through over-the-counter (OTC) markets accessible through your broker. But be aware that ADRs may not offer privileges, such as voting rights conferred by owning a company's home-market shares. You may need to be willing to forgo the prospect of voting as a shareholder to acquire stakes in promising international companies.
Gain direct international access through a broker
The other main way to invest in foreign stocks is to use a brokerage to obtain direct access to the exchange where the company is listed. A global account with a participating U.S. brokerage is suitable, or you can establish one in the country where you intend to trade.
Opening a global or foreign brokerage account may cause you to incur fees and taxes and face more regulations than you'd expect from a U.S. equity market. Also, your investment is not protected by domestic securities laws, and you could face difficulty achieving restitution through a foreign court.
Risks
What risks come with investing in international markets?
Although the rewards of investing in international stocks can be high, there are some risks to consider.
- International markets often see outsized impacts when economic conditions worsen.
- Political instability and other developments in the country can devalue an investment, and the values of currencies fluctuate.
- Geopolitical dynamics can result in the withdrawal of support from institutional investors and lead to poor stock performance
- Investors can face higher levels of risk related to visibility on business operations and the reliability of reported financial results.
Related investing topics
For instance, many countries in Latin America have seen inflation levels even higher than in the U.S. and relatively weak economic recoveries on the heels of the coronavirus pandemic. While foreign stocks often trade at low price-to-earnings and price-to-sales multiples relative to comparable domestic companies, they also tend to be even more sensitive to macroeconomic shifts, and the current backdrop suggests plenty of potential for volatility.
Foreign companies are also more likely to fail to meet most U.S. investors' communications and reliability expectations. Even foreign companies approved by the U.S. Securities and Exchange Commission (SEC) to list ADRs on U.S. exchanges sometimes fail to meet reporting expectations. It's vital to understand how well and by what means an international company communicates with investors.
Before investing in international stocks, consider how much risk you're comfortable with. While emerging markets grow faster, they also tend to be more volatile, so you may prefer to focus on developed economies. By establishing a clear strategy for your non-domestic portfolio, you are better positioned to endure market turbulence and pursue long-term gains.
FAQ
Investing in international stocks FAQ
What are the best international stocks to buy?
Investing in a group of international stocks that includes ASML, CD Projekt, MercadoLibre, Shoprite, and HDFC Bank would be a good way to gain exposure to a wide range of industries and geographic markets. But investors must also keep their personal risk tolerance and return goals in mind. There's no one-size-fits-all approach to investing.
What is the best international stock ETF?
There's no single international stock ETF that stands out as the best choice for all investors. Just as with investing in individual stocks, it's important to weigh your personal investment goals and risk tolerance when buying ETFs.
For example, investing in the Vanguard FTSE Europe ETF could be a good move if you're looking for broad exposure to the European market. Meanwhile, the iShares MSCI Emerging Markets ETF could be a good choice for investors seeking to benefit from growth in countries such as China, India, Brazil, South Korea, and South Africa.
Are international stocks more risky than U.S. stocks?
International stocks are riskier than U.S. stocks. The U.S. economy has generally outperformed foreign peers over long-term periods, and the country's relative levels of financial and political stability suggest lower levels of risk for domestic companies. Regulatory requirements set in place by the SEC and individual requirements put in place by major exchanges like the Nasdaq and New York Stock Exchange (NYSE) also give investors in U.S.-based companies a stronger level of protection and visibility into financial results compared to many international stocks.
How can I invest in international stocks?
Many international stocks are still listed on major U.S. exchanges. Buying international stocks that trade on the Nasdaq or the NYSE isn't any different from buying U.S.-based stocks on these exchanges.
If a company's stock is not listed on the Nasdaq or the NYSE, you may be able to purchase OTC shares. When buying and selling OTC shares, you do not typically have the option to purchase or sell at the current market rate, requiring you to enter a market bid or ask price instead.
Most major brokerages now offer fee-free trading for stocks on the Nasdaq and NYSE exchanges. However, trading on the OTC market typically has a fee for each block of purchase or sell orders.
Can U.S. citizens invest in foreign stock markets?
U.S. citizens can directly invest in many foreign stock markets by opening a brokerage account that allows for direct trading, but there are exceptions. Additionally, establishing holdings through a foreign stock market may result in additional fees and subject you to additional levels of regulations. U.S. citizens who hold stocks directly through foreign exchanges also face some additional tax reporting requirements.
Is it smart to invest in international stocks?
Many investors find it smart to have some exposure to international stocks. Many great companies are based outside the U.S., and limiting yourself to investing only in domestic businesses can mean missing out on some great opportunities.
On the other hand, investors must consider their personal risk tolerance and goals. As a broad category, international stocks come with some added risks compared to domestic stocks. Backing high-quality, reliable businesses is the best way to score strong returns over the long term, and prioritizing these kinds of companies is even more important when investing in international stocks.
