For U.S. investors, looking outside the domestic market can open doors to companies and opportunities you simply can’t find at home. Whether it’s European luxury brands, Asian tech giants, or fast-growing firms in emerging markets, international stocks give you a way to diversify and broaden your portfolio.
Adding international exposure can also help balance risks. If the U.S. economy slows, other regions may perform better, helping smooth out returns. On top of that, global investing allows you to take advantage of currency shifts and tap into industries where non-U.S. companies dominate.
The best part? Trading international stocks is easier than ever. Between ADRs, ETFs, and even direct access to foreign exchanges through modern brokers, you have multiple ways to participate. Below are five steps to help you understand the basics, explore your options, and track everything with TIKR.
Step 1: Know Your Options for International Investing
There are several ways to buy international stocks, and each comes with trade-offs in simplicity, cost, and access.
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- American Depositary Receipts (ADRs): ADRs are U.S.-listed securities that represent shares in a foreign company, making it easy to buy global names like Toyota, Nestlé, or Alibaba. They trade in dollars, settle through U.S. systems, and often come with the same disclosures as U.S. stocks, which simplifies research and reporting. For many investors, ADRs are the first and most convenient step into global investing.
TIKR Tip: Search ADR tickers in TIKR to see valuations and analyst forecasts in U.S. dollars. - Global ETFs and Mutual Funds: ETFs like iShares MSCI EAFE (Europe, Australia, and the Far East) or emerging-market funds provide packaged exposure to dozens of international companies. They help spread risk across many stocks, which is useful if you want exposure to a region but aren’t sure which company to pick. Mutual funds add professional management but often with higher fees than ETFs.
- Direct Shares on Foreign Exchanges: Some brokers allow direct trades on exchanges like the London Stock Exchange or the Tokyo Stock Exchange. This gives you access to companies that don’t issue ADRs, but it requires currency conversion and sometimes extra paperwork. Direct ownership also means you’ll need to understand foreign trading hours and settlement processes.
- Over-the-Counter (OTC) Listings: Many international companies trade in the U.S. via OTC markets. These can provide access to less well-known firms, but liquidity is often lower, and bid-ask spreads can be wider, making trading costlier. They may also come with less frequent reporting, so research is essential before buying.
By weighing these options, you can decide whether to start simple with ADRs or ETFs, or branch into direct international trading. Once you know the vehicles available, the next step is to understand why adding international stocks can strengthen your portfolio.
Step 2: Why International Stocks Are Worth Considering
Adding international exposure isn’t just about variety; it can make your portfolio stronger and more balanced.
- Different Economic Cycles: Economies don’t rise and fall at the same time. For example, when the U.S. is slowing, Asia or Latin America might still be expanding, offering a counterbalance in returns. This out-of-sync behavior helps smooth overall performance.
- Diversification: U.S. markets are powerful but cyclical. By owning stocks from other regions, you spread risk across multiple economies and reduce reliance on U.S. performance alone. This can help protect your portfolio if domestic markets underperform.
- Unique Growth Stories: International markets are home to companies leading industries that the U.S. doesn’t dominate. Examples include Samsung in semiconductors, ASML in chip-making equipment, and MercadoLibre in e-commerce. These stocks give investors exposure to different innovation hubs around the world.
- Currency Exposure: While a strong dollar can reduce returns, a weaker dollar can boost them. For investors, this adds another layer of diversification since global currencies don’t all move together.
TIKR Tip: Compare regional ETFs in TIKR against the S&P 500 to see how global markets move differently.
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These forces make international markets an attractive complement to U.S. holdings. Knowing the benefits is one thing, but the next step is to figure out what to look for when choosing individual global companies.
Step 3: What to Look For in International Stocks
The criteria for picking strong companies abroad are similar to the U.S., but a few extra factors matter.
- Liquidity: Large international companies often trade easily, but smaller OTC listings may not. Low liquidity can make it harder to enter or exit positions at a fair price, so this factor matters when choosing where to invest.
- Corporate Transparency: Not every market has strict reporting standards, so governance is key. Look for companies with consistent disclosures, audited financials, and strong investor communication. This helps reduce surprises and improves trust in reported results.
- Country and Currency Risk: Political changes, inflation spikes, or unstable governments can create volatility in some regions. Currency fluctuations can add another layer of unpredictability. Understanding the economic and political backdrop helps investors gauge the true risks behind the stock.
- Industry Leadership: Companies like TSMC in semiconductors or LVMH in luxury goods dominate their industries. Market leaders tend to have pricing power, global reach, and resilience, making them safer bets within international investing.
TIKR Tip: Use TIKR’s peer comparison tool to benchmark global leaders against U.S. competitors. - Dividends: Many foreign companies, especially in Europe, have strong dividend histories. These payments can offset currency volatility and provide a steady income, making them attractive for long-term investors.
By paying attention to these factors, you can match the right international investments to your risk tolerance and long-term strategy. Once you’ve defined your criteria, the next step is deciding how to get started in practice.
Step 4: Getting Started with International Trades
Once you’re ready to make a move, here are practical ways to begin.
- Choose a Broker with Global Access: Some brokers, like Interactive Brokers, allow direct access to foreign markets. This opens the full range of companies not available via ADRs or ETFs. Be prepared for additional tax documents and to monitor foreign trading schedules.
TIKR Tip: Track fund profiles in TIKR to review holdings and regional exposure before buying. - Start Small: International investing has unique variables like currency moves and different settlement rules. By beginning with smaller positions, you can get comfortable with how costs, timing, and volatility work before scaling up. This approach reduces risk while you learn the mechanics.
- Start with ADRs: ADRs are the simplest entry point. They’re traded in U.S. dollars on U.S. exchanges and come with familiar reporting standards. For beginners, they remove most of the complications of going abroad while still providing global exposure.
- Use Global ETFs: ETFs offer a low-maintenance way to get international exposure across regions or themes. They’re cost-effective, widely available, and reduce single-company risk. If you’re new to global investing, they can act as a foundation while you explore individual stocks.
Each of these approaches offers a different path into global markets, from straightforward ADRs to more advanced direct trading. With those tools in mind, the final step is learning how to use TIKR to keep everything organized and actionable.
Step 5: Using TIKR to Track and Research Global Stocks
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Researching and monitoring international stocks can feel overwhelming, but TIKR helps keep it manageable.
- Follow Global News: Use TIKR’s News tab to monitor regulatory updates, geopolitical events, and company announcements in real time. Staying current helps you respond faster when global headlines affect your positions.
- Search Both ADRs and Direct Shares: Whether you want to analyze Alibaba’s ADR in New York or its primary listing in Hong Kong, TIKR provides data for both. This flexibility helps you decide which version fits best for your portfolio.
- Create Region or Sector Watchlists: Organize your portfolio by geography or theme. For example, build a “Europe Industrials” list or “Asia Tech” list to compare performance and growth across categories.
- Track Currency Effects: TIKR’s chart overlays let you pair stock performance with currency moves. This helps show whether business results or exchange rate swings drive returns.
- Review Analyst Forecasts: Consensus revenue and EPS estimates on TIKR make it easier to understand expectations for global companies. This is especially useful in markets where analyst coverage can be thin.
- TIKR Tip: Create an “International” watchlist in TIKR to monitor your global holdings together.
Using TIKR’s features to track performance, valuations, and global news gives you an edge in navigating international markets. With this structure in place, you’ll be better equipped to build and manage a portfolio that spans beyond U.S. borders.
Trading International Stocks, Made Simple
International stocks are more accessible than ever for U.S. investors. Whether you start with ADRs, add an ETF for broad exposure, or eventually trade directly on foreign exchanges, global investing can help diversify your portfolio and add unique opportunities.
You don’t have to go all in, starting small and learning the mechanics is a smart way forward. With TIKR, you can keep your research in one place, compare peers across markets, and stay on top of both financials and headlines. Done right, international investing can become a natural extension of your overall strategy.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
