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 37% over the last year, spurred by the stellar performances of a large variety of stocks. At first it was just turnaround story or junk stocks that saw huge gains, but now even blue chips like Caterpillar (NYSE: CAT) have seen run-ups of over 85%! Not that Caterpillar isn't a great company, but its trading for 47 times earnings -- well above the average for the S&P -- and is a good example of how over-extended the market has become.

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 or the iShares MSCI Emerging Market ETF, which both performed spectacularly during 2009. In such an over-valued segment, you'd figure that every fund manager in the states had his or her hands all over emerging markets.

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 that's returned a whopping 575% in the past five years. But 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
So basically 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. In addition, the recent debt crisis in Europe and the political uncertainty everywhere from Venezuela to the UK has helped cause a tumble in the marketplace, bringing down even the best of stocks.

Now is a great time to get in on emerging markets -- the second time around – when some of them have been beaten down for no apparent reason. Check out these stocks that have seen pretty drastic price decreases but that are still trading at reasonable rates:



1-Month Price


Trina Solar (NYSE: TSL)




Jinpan International (NYSE: JST)




China Green Agriculture (NYSE: CGA)




Petrobras (NYSE: PBR)




America Movil (NYSE: AMX)




Each of these companies have fantastic emerging market exposure, have been battered in the last 30 days, and are still trading pretty cheap considering how hot emerging markets have been.

In fact, three out of the last six stocks I've purchased have been from developing countries. One of them, Ituran Location & Control (Nasdaq: ITRN), 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. The company has developed a GPS locating system for cars and valuables that is capable of recovering a stolen vehicle in less than 20 minutes. Although most of its revenue comes from its home country of Israel, it's got significant market share and room to grow in Brazil, where a car is stolen every 3 minutes in Sao Paulo.

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 Ituran Location & Control. America Movil, China Green Agriculture, and Ituran Location & Control are Motley Fool Global Gains recommendations. Jinpan International is a Motley Fool Hidden Gems pick. Petrobras is an Income Investorselection. The Fool owns shares of China Green Agriculture. The Fool has a nomadic disclosure policy.