Emerging market value stocks deserve a spot in your investment portfolio. Not only do they diversify your portfolio, but they also have high upside potential.
So what are some of the best emerging market value stocks to buy now? We’ve saved you some time and captured seven of our favorites for 2023.
Best Emerging Market Value Stocks To Add
Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM)
Taiwan Semiconductor Manufacturing Company is the largest of its kind in all of Taiwan. The company designs and produces some of the world’s leading semiconductor components.
It’s done so since its inception in 1987. As the first dedicated semiconductor company, TSMC has long been a leader in this field.
With 17 fab locations, TSMC routinely makes 12-inch, 8-inch, and 6-inch wafers.
The number of semiconductors TSMC produces grows yearly, with its current performance capacity at 13 million wafers.
Many of these products find their way into products from top computer part manufacturers such as Nvidia and Apple.
It’s actively working on plans to build at least one facility in the southwestern United States.
Taiwan Semiconductor’s capabilities go beyond semiconductors to prototyping and mask services.
TSMC is also unafraid to innovate, constantly looking for new ways to improve designs and processes.
After first being listed on the Taiwan Stock Exchange in 1994, TSMC posted shares on the New York Stock Exchange in 1997.
The company continues to see higher revenue gains, revealing a 43% increase in its December financials.
This news propelled TSM stock upward after a drought in 2022. Even as shares appear to climb, Taiwan Semiconductor Manufacturing looks significantly undervalued.
There’s still room for TSMC to recover from the semiconductor shortage that began a few years ago.
Vale SA (NYSE: VALE)
Vale SA is a Brazilian company with a focus on the mining industry. It is the largest producer of nickel and iron in the world.
Operations don’t stop there, as the company also digs for a number of other metals useful in the production of goods globally.
Vale gets a lot of ore from mines in Brazil but also has several locations in other nations.
In total, Vale has a presence in more than 20 different countries. Founded in 1942, Vale is considered the most valuable company in Latin America.
Alongside mining, the company has a hand in logistics, moving ore and other materials by train and ship. Its business interests extend to energy production as well.
Vale has eight hydroelectric plants to power its operations while also helping to meet the needs of the area. The company is not without problems, though.
Two large dam failures in 2015 and 2019 considerably impacted ore production.
In addition to losing its license for future dams, stock prices sunk close to 25%.
Revenue streams still exceed $52 billion, but these numbers are lower than expected. A low P/E and price/book value paint VALE as undervalued.
Analysts are confident Vale still has some catching up to do.
As share prices move toward a proper valuation, investors can take advantage of a 7.9% dividend yield.
Daqo New Energy Corp (NYSE: DQ)
Daqo New Energy Corporation is a Chinese manufacturer of high-quality polysilicon. This polysilicon finds use in the global solar photovoltaics industry.
Opening its doors in 2008, Daqo is now one of the world’s lowest-cost producers of the element. The company also produces silicon wafers for use in microchips.
All operations currently take place in Daqo’s manufacturing facility in Xinjiang, China.
There, Daqo can produce up to 70,000 metric tonnes of polysilicon per year.
In December, Daqo announced an expansion project into Inner Mongolia to boost capacity as high as 305,000 metric tons per year.
Daqo continues to see soaring revenue growth, thanks in part to demand and due to its high-efficiency process.
Its fall numbers put revenue streams up over 100% from the previous year. Like other semiconductor companies, Daqo was hit hard by the global pandemic a few years back.
With a part shortage still in place, there’s plenty of room for Daqo to improve in the near future. The company’s P/E ratio sits under 5, revealing a likelihood of undervalue.
A 3.29 price/book value is below the average for the market sector. Shares are currently down some 50% from a 52-week high, leaving lots of room for positive movement.
No dividend yield is being offered at this time.
Pampa Energía S.A. (NYSE: PAM)
Pampa Energía invests in energy to produce more energy.
The Argentinian company deals in oil, gas, and electric power markets.
Founded in 2005, Pampa Energía is the largest independent energy company in the area.
It taps into one of the country’s most important hydrocarbon basins for its supply.
This single location generates 5,000 barrels of oil and 9 million cubic feet of gas per day.
In a quest for more energy, Pampa also explores new oil and gas sources.
It has a presence in five exploration blocks in Argentina, hoping to find new areas to produce the two substances.
Pampa Energía also runs the largest gas transportation company in Argentina and has the most extensive pipeline system on the continent.
Electric power comes from a long list of natural, sustainable energy sources. These include wind, hydro, and thermal as permanent generators of Wattage.
With all this power, Pampa commands more than 85% of the high-voltage lines in the country.
Share prices have followed an upward momentum over the last few years, a positive sign for any organization.
Still, this valuation is nowhere near where it was during the highs of 2017 and 2018.
Analysts suspect PAM stock will reach those high valuations again in the near future.
The numbers seem to agree, with PAM holding incredibly low P/E and P/B values.
Alibaba Group Holding Ltd (NYSE: BABA)
Alibaba is a Chinese e-commerce, retail, and internet giant.
First established in 1999, the company is all about connecting businesses to consumers through web portals.
It also incorporates shopping search engines, electronic payment systems, and online technology to bring people together.
Through these tools, Alibaba provides the means for any business to create the infrastructure and marketing tools it needs.
The holding corp does all this by owning a diverse portfolio of companies. While already a large-scale operation, Alibaba hopes to grow even larger.
Its vision for the 2036 fiscal year is to serve more than 2 billion customers worldwide. As a whole, Alibaba consistently seeks the innovations it needs to stay ahead of the competition.
The company even hopes to rival the likes of Amazon. During its IPO on the New York Stock Exchange in 2014, Alibaba raised more funds than any other company in history.
Analysts believe Alibaba stock has not reached its potential, citing a price point some $30 higher than the current valuation.
The stock is rounding the dip after a lackluster 2022 that left shares down some 60%.
Its price-to-book ratio sits surprisingly low, indicative of value stocks.
Sociedad Quimica y Minera de Chile S.A. (NYSE: SQM)
Sociedad Quimica y Minera is a global mining corporation. The company was created in 1968, but its origins date back to 1926.
Although mining is SQM’s bread and butter, it has a presence in several industries.
These business lines include Specialty Plant Nutrition, Lithium, Iodine, Potassium, and Solar Salts.
It is the largest lithium producer in the world. Primary applications for this lithium supply include batteries, ceramics, and dyes.
Many of the minerals SQM mines funnel back into its agronomic and fertilization business. Such a variety of industries under its belt gives Sociedad Quimica y Minera a diverse portfolio.
This diversity helps it combat up and down swings with one material alone. All SQM’s materials are currently extracted from seven locations in northern Chile.
SQM continues making strategic deals with other companies to expand to new areas.
Joint ventures are in the works to allow Sociedad Quimica y Minera to tap into basins in Western Australia.
It showcases all the signs of a solid value stock with low price-to-earnings and price-to-book ratios.
The company also continues to show strong financials, with huge wins in revenue growth in the triple digits over the last year.
To top it all off, SQM pays a healthy 8.88% dividend yield.
Ecopetrol SA (NYSE: EC)
Ecopetrol is a major player in the Colombian petroleum market.
Founded in 1948, the company is the country’s largest oil and natural gas provider.
Although initially privately owned, Ecopetrol is now majority owned by the state. The company has access to nearly 9 million hectares of explorable area in the countries it operates.
While most of its production comes from Colombia, Ecopetrol operates in Mexico, Brazil, and the United States.
Its crew averages roughly 700 thousand barrels of oil per day to keep up with demand.
After drilling for oil, the producer runs a wholly-owned transport business to deliver products from place to place.
It moves supply through pipelines and multimodal fleets of ships and vehicles.
On the financial side, Ecopetrol more than doubled its income for each quarter in 2022. Despite solid growth, its stock dropped from the beginning of the year.
Its price target through 2023 will jump over 20% as shares catch up.
Price to earnings and price to book values under 4 corroborate this claim.
A 19% dividend yield reveals Ecopetrol’s financial stability as we venture into the new year.
Are Emerging Market Value Stocks a Good Investment?
Emerging market value stocks can undoubtedly be a good investment if you play your cards right.
While there’s no exact science behind an emerging market, the term typically represents some from developing economies on the fast track to economic growth.
Countries like Brazil, China, and India have seen explosive growth over the last ten years and tend to dominate this space.
The United States may still reign supreme, but the top emerging markets are rapidly making more of an impact on the global economy.
Others are still in the early stages of development and have yet to achieve stable market conditions.
Emerging markets tend to have more volatility than developed economies. Such fluctuations can result in higher gains, but investing there also brings increased risk.
This is where value stocks enter the picture. Value stocks represent undervalued companies not yet trading shares at fair market price returns.
We’re talking about companies with strong past performance just trying to catch up to a market price point they deserve.
This path is often recession resistant and likely to achieve positive future results.
In theory, emerging market value stocks can share higher profit potential while minimizing the downsides.
On another positive note, even established companies in emerging markets tend to have lower valuations. This makes for a very attractive price point.
If your portfolio consists mostly of stocks from developed markets, you’re missing out.
Emerging markets make up half the world’s GDP but rarely amount to much in our investments.
All the value stocks listed here have the potential to offer you significant capital gains. Because value stocks often have solid financials, many pay out dividend yields.
We’re looking forward to seeing what the value stocks listed here will do as the year progresses. As with any stock, there’s no way to guarantee future results.
Frequently Asked Questions (FAQs)
This FAQ answers some of the most common questions about the best emerging market value stocks.
What Are Emerging Value Stocks?
Emerging value stocks are undervalued securities found in developing nations around the world. The profit potential from both areas compounds the opportunity for higher future returns.
What Are Good Emerging Market Stocks?
Any of the picks in this article look to be excellent emerging market stocks. They lean on the value side, providing more stability in the face of market turmoil.
How to Buy Emerging Market Value Stocks?
You can jump into emerging markets by purchasing stocks, ETFs, or mutual funds. Each has its pros and cons, depending on your investment objective.
Is it Worth Buying Emerging Markets?
It’s worth adding emerging market stocks to your portfolio. Doing so provides necessary diversity and a chance at higher-than-average gains.
Which Merging Market ETF is Best?
In a recent article, we picked Vanguard FTSE Emerging Markets ETF (NYSEARCA: VWO) as our favorite emerging market ETF. iShares MSCI World ETF (NYSEARCA: URTH) has a nice mix of developed countries and emerging markets if that’s more your style.
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