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Are There Deals in the Emerging Market Stocks?

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  • (0:30) - Beaten Down Emerging Markets
  • (4:25) - Stock Screener Criteria 
  • (6:30) - Tracey’s Top Stock Picks
  • (14:00) - Are There Chinese Value Stocks?
  • (23:45) - Episode Roundup: AMX, ASR, EJR, CYOU, YRD
  •             Podcast@Zacks.com

 

Welcome to Episode #109 of the Value Investor Podcast

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.

The emerging market stocks have seen their worst performance, year-to-date, in 2018 since the Great Recession in 2008 and 2009.

The emerging market ETFs are down anywhere from 9% to 12% so far this year. That’s big under performance compared to the S&P 500 which is up 7.2%.

Does that mean there are cheap stocks in the emerging market?

How to Find Emerging Market Stocks

There’s no set definition what the emerging market even is but most agree it includes Mexico, Brazil and China.

With Zacks ZRS, you can screen for companies based on where they are domiciled.

Then you can add a value P/E under 15 and other fundamentals such as stocks trading within 10% of their 52-week lows.

I screened for Mexico, Brazil and Chinese stocks. The China screen produced 276 companies.

Are any of them a deal?

5 Emerging Market Stocks: Values or Traps?

1.       America Movil (AMX - Free Report) is Mexico’s largest company, dominating the telecommunications industry in Mexico. Shares are down over 7% year-to-date but still trade with a forward P/E of 17. Is this cheap enough to make it a deal?

2.       ASUR (ASR - Free Report) is a Mexican international airport group with operations in Mexico, San Juan Puerto Rico and Colombia. It operates two of Mexico’s crown jewel airports: Cancun and Cozumel. Shares are down only 4% year-to-date after several years of big gains. Is ASUR a value stock?

3.       Embraer-Empresa (ERJ - Free Report) is a Brazilian commercial and executive jet manufacturer. The Brazilian economy and stock market have been volatile the last few years but Embraer does business worldwide. The shares are down 24% year-to-date. Could this be a value stock now?

4.       Changyou.com (CYOU - Free Report) is a Chinese online game developer. While that industry used to be hot, the Chinese government has been making regulatory moves against it in the prior weeks. Shares have plunged 64% in 2018. It has a P/E of 11. Should you take a chance on the Chinese stocks?

5.       Yirendai Ltd is a Chinese online consumer finance company with an online loan platform. The Chinese government is cracking down on P2P programs causing volatility in the industry. On Aug 29, Yirendai suspended its dividend due to “a challenging market environment with business uncertainties.” Still, the stock is dirt cheap with a forward P/E of 7.4. Is it a value or trap?

It’s tough to invest in the emerging markets as there is just less information about the companies available.

What else should you know about investing in emerging market stocks?

Tune into this week’s podcast to find out.

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