Is Trip.com Group (TCOM) the Best ADR Stock to Buy According to Hedge Funds?

In the ever-evolving landscape of global investments, American Depositary Receipts (ADRs) offer a gateway to international markets, allowing investors to tap into the growth potential of companies based outside the United States. Among the myriad of ADR stocks, Trip.com group (TCOM) has garnered significant attention from hedge funds and analysts alike. With a strong consensus of "Strong Buy" and "Buy" ratings, coupled with an impressive average price target, TCOM stands out as a compelling investment opportunity. But is it the best ADR stock to buy? Let's delve into the data and insights to find out.



Analyst Ratings and Price Targets

Trip.com Group (TCOM) has received a resounding endorsement from the analyst community. Out of 13 analysts, 13 have given it a "Strong Buy" rating, 11 a "Buy" rating, and 2 a "Hold" rating. This overwhelmingly positive sentiment is reflected in the average price target of $74.92, which represents a 19.53% upside from the last price of $62.68. The highest price target stands at $84.00, while the lowest is $60.00. These figures underscore the confidence analysts have in TCOM's future performance.

Hedge Fund Interest

Hedge funds, known for their astute investment strategies, have also shown a keen interest in TCOM. At the end of September, 36 hedge funds held positions in TCOM, although this is a slight decrease from 41 hedge funds in the second quarter of 2021. Despite this minor dip, the continued interest from hedge funds indicates that TCOM is still seen as a valuable investment. Platinum Asset Management and Fisher Asset Management are among the top holders, with significant stakes in the company.

Key Drivers of Bullish Sentiment

Several key factors are driving the bullish sentiment among hedge funds towards TCOM:

1. Strong Revenue Growth and Strategic Investments:
- Kevin Kopelman from td cowen reiterated a "Buy" rating on Trip.com Group Ltd., citing "Strong Revenue Growth and Strategic Investments Drive Continued Confidence Despite Price Target Adjustment." The travel industry's rebound post-pandemic, coupled with Trip.com's strategic investments, makes it an attractive investment for hedge funds.

2. Positive Earnings Forecasts:
- The next quarter’s earnings estimate for TCOM is $0.76 with a range of $0.62 to $0.86. TCOM beat its EPS estimate 100.00% of the time in the past 12 months, outperforming its overall industry. This consistent track record of beating EPS estimates indicates financial health and growth potential.

3. Analyst Ratings and Price Targets:
- The positive analyst ratings and high price targets reflect confidence in the company's future performance. For example, Yang Liu CFA from Morgan Stanley raised the price target to $81, citing a 29.23% upside. Similarly, Brian Gong from Citi reiterated a "Buy" rating, citing a "Positive Outlook for Trip.com Group Ltd. Driven by Strong Future Performance and Travel Growth."

4. Economic Recovery and Travel Growth:
- The global economic recovery and increased travel demand post-pandemic are driving growth in the travel industry. This macroeconomic trend aligns with TCOM's business model, making it an attractive investment for hedge funds.

5. Technical Indicators and Sentiment:
- Despite short-term bearish sentiment, the long-term technical indicators and volatility suggest potential for growth. TCOM stock recorded 10/30 (33%) green days with 4.99% price volatility over the last 30 days, indicating stability and potential for future growth.

Comparative Analysis

Comparing TCOM to other leading ADR stocks, we can see that TCOM has a higher average price target and a higher percentage of "Strong Buy" and "Buy" ratings. For example, Insulet Corporation (PODD) has 32 hedge funds with positions, but the average price target is not provided. AMC Entertainment Holdings Inc (AMC) has 17 hedge funds with positions, but the average price target is also not provided. DraftKings Inc. (DKNG) has 28 hedge funds with positions, but the average price target is not provided. FirstEnergy Corp. (FE) has 38 hedge funds with positions, but the average price target is not provided. Broadridge Financial Solutions, Inc. (BR) has 17 hedge funds with positions, but the average price target is not provided. SK Telecom Co., Ltd. (SKM) has 6 hedge funds with positions, but the average price target is not provided. Halliburton Company (HAL) has 29 hedge funds with positions, but the average price target is not provided.



Conclusion

In conclusion, Trip.com Group (TCOM) stands out as a top ADR stock to buy according to hedge funds and analysts. With strong revenue growth, positive earnings forecasts, favorable analyst ratings, continued hedge fund interest, economic recovery, and technical indicators, TCOM aligns with broader market trends of investing in growth stocks and the travel industry's rebound post-pandemic. While no investment is without risk, the data and insights suggest that TCOM is a compelling investment opportunity for those looking to tap into the growth potential of the travel industry.

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