After the spectacular rally in 2009, there aren’t nearly as many places to find value in the marketplace. After all, the S&P 500 has rushed ahead 43% over the last year, spurred by the stellar performances of stocks like DuPont (NYSE: DD) and Advanced Micro Devices (NYSE: AMD).

In the last week alone, U.S. junk bonds have seen inflows of $539 million, as investors clamor to find higher rates of return.

With almost every stone turned over and almost every headline read, it seems as if investors aren’t quite sure what to expect from 2010 moving forward. After such an emotional roller coaster, it’s as if we all need to stop, take a deep breath, and figure out where we can still find value.

So ... now what?
Let me help by asking you three simple questions:

  1. What if I told you there was an asset class that some predict will account for 70%-75% of the growth in global output for the foreseeable future?
  2. What if I told you that same asset class didn’t suffer from the massive indebtedness or extreme leverage that plagues so many other categories of investments?
  3. What if I told you that asset class -- reaping gains close to 70% for 2009 and still with enormous growth potential -- accounted for less than 3% of assets held by U.S. fund managers?

If you’re anything like me, you’d want to know where to sign up!

Well, the secret is already out, so I’ll go ahead and tell you which asset class I’m talking about. In fact, you may have guessed it already: emerging-market stocks.

It’s probably pretty hard to believe that after all the hype emerging markets have received, such a small number of us actually own their stocks. Most of us missed out on the types of returns generated by the Vanguard Emerging Markets ETF -- which holds stocks like China Mobile (NYSE: CHL) and Teva Pharmaceutical (Nasdaq: TEVA) and surged ahead by 76% in 2009. But it’s true: Less than 3% of assets invested by U.S. fund managers are in emerging markets. And that’s good news for us right now.

Some experts say the number of investors in emerging markets could possibly double over the next five years. Like I said, the secret is already out, and that means twice as many investors could be combing the marketplace looking for the next dynamite company -- a stock like China Automotive Systems (Nasdaq: CAAS) that’s returned a whopping 500% in the past year. Since it's always better to beat the crowd in investing, you should get into emerging markets sooner rather than later.

Is it already too late?
It wouldn’t be strange to think that you’re already the last one to the party, but that’s the worst assumption you could make. Take a look at how the following countries' stock markets have performed over the past two years.


2008, % Change From Previous Year

2009, % Change From Previous Year
















What you should notice is that although these countries have performed extraordinarily well in 2009, most of them still haven’t made up their prior losses. Everyone assumes that because emerging markets have rebounded more strongly than we could have imagined, that there are barely any deals left. But assuming that it’s too late is a huge miscalculation -- you just have to know where to look to find the best bargains.

Emerging markets: the second time around
There’s no doubt these stocks are becoming popular. In fact, according to Morningstar, they’ve seen some $18 billion of inflows this year alone. I don't believe that fashionable stocks that have already seen impressive gains -- like Baidu (Nasdaq: BIDU) or Satyam Computer Services (NYSE: SAY) -- are the places to look for new growth stories. Paying too much for stocks that have already seen huge run-ups can be just as bad as missing out on the party in the first place.

So you’ve got two options. You can ignore emerging markets altogether and miss out on decades of extraordinary growth, or you can take advantage of the massive amount of information out there to buy stocks that weren’t snapped up the first time around.

The second choice is what we try to do here at Motley Fool Global Gains. Our team uses insights and valuable information gathered from our annual trips to China and India -- information collected while touring manufacturing plants and meeting with the management of small, respected companies.

Two out of the last three stocks I’ve purchased have been from developing countries. One of them, Guangshen Railway, is a selection of the Global Gains team. After reading their buy report and lengthy analysis, I was convinced that this was a stock worth investing in. I’m confident that developing countries are the place to be for the long term, and that purchasing them now not only gives you great growth potential, but also helps to diversify your portfolio with international exposure.

If you’re interested in getting in on the second round of tremendous growth, you’re in luck: You can see all of our research and recommendations by being our free guest at the service for 30 days. Click here to take us up on the offer.

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Fool contributor Jordan DiPietro owns shares of Guangshen Railway. Baidu is a Motley Fool Rule Breakers selection. Guangshen Railway is a Motley Fool Global Gains pick. The Fool owns shares of China Mobile. The Fool has a nomadic disclosure policy.