Many of these emerging market stocks are up 20% or more in 2022.
It has been a pretty brutal year for many “risk-on” investments in 2022, including tech companies and small-cap stocks. And in such an environment, emerging market stocks typically also suffer as investors hunker down in tried-and-true domestic blue chips rather than placing risky bets in far-flung regions of the world. However, there’s a lot to be said for geographic diversification and a pursuit of growth in fast-growing regions, regardless of the broader market environment. Furthermore, there’s Warren Buffett’s saying that the best time to be greedy is when others are fearful — and right now, fear of emerging market stocks has created some big-time bargains for aggressive traders. If you’re not afraid of the volatility or risks, consider these seven top emerging market stocks now.
Daqo New Energy Corp. (ticker: DQ)
One of the leading solar companies in China, Daqo is a manufacturer of polysilicon, the primary material in solar cells, and is currently ramping up operations to become more than just a supplier and instead one of the top vertically integrated photovoltaic product manufacturers in the world. The solar cell manufacturing business can be notoriously low-margin, so having a strong grip on the supply chain could give DQ a big edge. Shares are up about 30% so far in 2022 thanks to optimism over this company’s growth plans, with a whopping 160% in revenue expansion predicted for this fiscal year. The outlook for alternative energy is admittedly uncertain, but with sky-high oil prices there is a lot of incentive for policymakers to support companies like DQ that are helping to ensure a clean energy future in China, as well as elsewhere in the world.
Itaú Unibanco Holding SA (ITUB)
A major bank headquartered in Brazil, ITUB offers business and consumer banking services in the region, from basic savings accounts and credit cards to business solutions, mortgage lending and investment management. Brazil’s economy struggled amid government scandals a few years ago, followed quickly by the disruptions of the pandemic. But the regional recession ended in 2021 and Brazil’s economy is back on track. This local bank has been recovering in kind, with shares up more than 40% year to date. Looking forward, Brazil is the largest Latin American economy and the most likely to benefit from any sustained recovery in the global economy — so investors looking past the disruptions of 2022 to the future may want to carve out a long-term position in this leading Brazilian bank.
MakeMyTrip Ltd. (MMYT)
Though not well known to Western travelers, online travel company MMYT offers airline tickets, bus passes, hotel packages, rental cars and all manner of other products to customers in emerging markets that include India, Singapore, Malaysia, Thailand, the United Arab Emirates and Indonesia. In addition to robust online operations, it also operates about 125 franchisee-owned travel stores to directly serve customers in busy areas. The India-based company is currently valued at $4 billion, and growing fast with revenue expected to jump 120% in the current fiscal year and another 35% next year. With pent-up demand for travel now resulting in a rush of bookings after pandemic-era restrictions have been lifted, MMYT is an emerging market growth stock in the right place at the right time. Though MMYT’s 2022 performance is in the single digits, its trailing-12-month performance is about 30%.
Pampa Energía SA (PAM)
An integrated power utility, Pampa is primarily engaged in the generation and transmission of electricity in Argentina. In an era of soaring fossil fuel prices, the presence of extensive hydroelectric and wind operations has really paid off for PAM stock. The company also operates modest energy exploration and production efforts simply to fuel its own oil and gas power plants. This has helped it maintain much better margins than utility companies that are just buying and burning fuel, and has allowed PAM to deliver an impressive gain of more than 20% so far this year.
Sigma Lithium Corp. (SGML)
Sigma is one of the rare stocks out there that has put up huge gains so far this year while the rest of Wall Street has suffered. That’s because it’s at the center of two important trends. First, as a lithium production firm it is seeing high demand for the material from electric vehicle and high-tech battery manufacturers. And second, like many other raw materials stocks SGML is seeing strong pricing power because of persistent inflationary pressures. The result is a phenomenal 160% gain so far this year for the roughly $3 billion Brazilian mining company.
TAL Education Group (TAL)
TAL offers after-school tutoring services in China to school-age students ranging from kindergarten to high school. It also offers online learning platforms, and sells educational materials and products to third parties. The timing is right for a company like TAL, particularly as students return to in-person schooling and parents seek help for children who fell behind academically during the pandemic. Admittedly, the raw numbers are down from their COVID-19 peak, but this stock stabilized last year and has steadily moved higher in 2022 with gains of roughly 30%.
YPF SA (YPF)
YPF is an integrated oil company that is majority-owned by the Argentine government. While smaller than other major Big Oil companies like Exxon Mobil Corp. (XOM), the model is similar in that this energy firm is engaged in oil and gas exploration, production and refining through all parts of the supply chain. Obviously there are complications with being a state-run company, but there’s also a big measure of stability in tough times thanks to government backing. And when energy prices rise, as they have in 2022, it’s nothing but blue skies for a stock like YPF. Shares are up more than 60% this year, and they just hit a new 52-week high in mid-September.
7 of the best emerging market stocks to buy:
— Daqo New Energy Corp. (DQ)
— Itaú Unibanco Holding SA (ITUB)
— MakeMyTrip Ltd. (MMYT)
— Pampa Energía SA (PAM)
— Sigma Lithium Corp. (SGML)
— TAL Education Group (TAL)
— YPF SA (YPF)
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Update 09/21/22: This story was published at an earlier date and has been updated with new information.