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4 Emerging Market Value Stocks to Buy Now

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After a long downturn, emerging markets may soon experience better times. Strategists at leading banks and financial companies believe that securities from emerging markets may have hit their lowest point. Following three continuous years of losses for stocks and currencies, assets from developing nations are poised for a rebound.

Such an uptrend may not trigger an immediate rally for stocks, given the sentiment prevailing among emerging market investors. This will rather drive up the outlook for such securities which are undervalued compared to historical averages. Adding select emerging market stocks to your portfolio may be a prudent option at this time.

Market Watchers Raise Outlook

Market watchers at a number of leading banks and financial institutions have said that they believe that asset values for emerging markets have hit a rock bottom. This includes experts from the likes of Bank of America Corp. BAC to The Goldman Sachs Group, Inc. GS .

Analysts at Barclays PLC BCS have said that global money supply has increased at its fastest pace in nearly three decades. A significant part of this may be attributed to the monetary stimulus introduced by China.

The fortunes of China's economy will determine the fate of global growth to a large extent. Despite the dismal outlook, there are some positives to the China story. Fiscal spending has jumped nearly 36% from last year. Additionally, local governments have stepped up bond issues.

Reasonable Valuations

One of the major indicators of stock valuations for emerging markets is the MSCI Emerging Markets Index. This index has fallen 30% below the high achieved in 2011 and is currently trading at approximately 12x its earnings estimates. Additionally, the index's valuation is nearly a third lower than the S&P 500's current figure.

This is why analysts at Barclays believe that prices of emerging market securities are significantly lower than their intrinsic value. Over the six-month period since the last three American market tightening cycles began, global markets have gained an average 15%.

Our Choices

Goldman Sachs acknowledges that growth for developing economies will fall below long-term averages. However, the financial major believes such countries will register growth of 4.9% in 2016. This is significantly higher than this year's estimate of 4.4% and the first indications of growth in more than five years.

An uptrend in growth in emerging economies comes as good tidings for stocks from these countries. Moreover, these stocks currently have reasonable valuations compared to their historical averages. This is why it may be a good idea to add them to your portfolio. Our selection is also backed by a good Zacks Value Score and Zacks Rank.

We narrowed down our choices with the help of our new style score system .

Our research shows that stocks with a Value Style Score of 'A' or 'B' when combined with a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) offer the best investment opportunities in the value investing space.

Braskem S.A.BAK is a Brazil-based producer and seller of thermoplastic resins.

Braskem holds a Zacks Rank #2 (Buy) and has a Value Style Score of 'A.' The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 7.24, lower than the industry average of 12.70. It has a PEG ratio of 1.57, lower than the industry average of 3.97.

Sibanye Gold Ltd.SBGL is a gold mining company based in South Africa.

Sibanye Gold holds a Zacks Rank #2 (Buy) and has a Value Style Score of 'A.' It has a P/E (F1) of 13.59 as compared to the industry average of 34.13. It has a PEG ratio of 0.49, lower than the industry average of 1.99.

Woori Bank Co., Ltd.WF is a financial holding company based in South Korea. It offers banking products and services for companies and individuals through its subsidiaries.

Woori Bank holds a Zacks Rank #2 (Buy) and has a Value Style Score of 'B.' It has a P/E (F1) of 5.89 as compared to the industry average of 12.93. It has a PEG ratio of 0.98, lower than the industry average of 1.42.

Huaneng Power International, Inc . HNP is a China-based energy provider. It sells and distributes heat and electricity across the country and in Singapore.

Huaneng Power holds a Zacks Rank #1 (Strong Buy) and has a Value Style Score of 'A.' It has a P/E (F1) of 5.48 as compared to the industry average of 16.67. It has a PEG ratio of 0.42, lower than the industry average of 3.20.

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BARCLAY PLC-ADR (BCS): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

BRASKEM SA (BAK): Free Stock Analysis Report

WOORI BANK (WF): Free Stock Analysis Report

HUANENG POWER (HNP): Free Stock Analysis Report

SIBANYE GLD-ADR (SBGL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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