Emerging markets offer unique opportunities for investors. Many investors are hesitant to branch out to companies outside the U.S., but these three stocks offer a great buying opportunity. For those looking to expand their portfolios and gain some exposure to internationally based companies that have a positive potential for the future, look no further than these companies below.
All three stocks are a part of the iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), one of the most widely traded exchange-traded funds (ETFs). The fund currently has more than $20 billion under management.
Sociedad Química y Minera de Chile (SQM)
Sociedad Química y Minera de Chile (NYSE:SQM) is a mining company based in Santiago, Chile. It provides products for industrial uses, such as solar salts for water softening and bischofite used in the de-icing process. It also produces plant nutrient products for fertilizing and farming under Qrop, Speedfol, Allganic and Ultrasol. Furthermore, the company is a leading producer of lithium, iodine and other derivative products for application in the lithium industry.
So far this year, SQM has dropped by nearly 25%. This is mainly due to falling overall lithium spot prices. Its most recent earnings report was for the second quarter of 2023. The company stated a decrease in overall revenue of approximately 21% and a drop in net income of 32%. As I mentioned before, its earrings have been weighed down by the recent poor market for lithium and similar derivatives pricing.
SQM offers a unique buying opportunity in that its is one of the leading producers of lithium used for the production of electric vehicle (EV) batteries and other similar products. In fact, on May 22, the company announced it struck a deal with Ford (NYSE:F) to supply the automaker with its lithium products for use in EV production.
Overall, its share price has fallen this year due to the overall market — not so much from poor fundamentals. Additionally, a dividend payment of 61 cents per share for the second quarter makes the company a decent dividend play.
Petróleo Brasileiro (PBR)
Petróleo Brasileiro (NYSE:PBR) is an oil and natural gas production company based in Rio de Janeiro, Brazil. The company explores onshore and offshore oilfields. It also operates a refining segment and trades and sells crude oil and natural gas.
Over the past year, PBR has seen its share price grow by 18%. This is partly due to the rise in oil prices. In its most recent earnings report, released in August, the company stated somewhat lackluster results. Overall revenue fell by approximately 18.4%, and gross profit for the quarter fell by 21.3%. But the PBR share price continues to rise.
The recent and continued OPEC cuts have steadily increased overall oil prices. PBR is another company for long-term investors looking for exposure in the energy sector. Even year-to-date, the company’s share price has grown by nearly 46%.
And it’s still trading at a significant valuation of a forward P/E ratio of 3.4, which is much better than its peers. The company also offers a substantial annual dividend yield of 24%.
Li Auto (LI)
Li Auto (NASDAQ:LI) is headquartered in Bejing, China. The company designs, produces and sells EVs for customers in China. Its line of EVs includes the Li L7, Li L8, and Li L9, which are all compact SUVs.
The company has only been publicly traded since 2020, and it is already a prominent EV startup in the growing Chinese market. Since its inception, its share price is up more than 145%. And over the last year, LI stock is up 64%.Furthermore, its reported deliveries for the second quarter of 2023 tripled from just a year ago. Overall revenue also more than tripled compared to the year before.
Within the rapidly growing EV market worldwide, especially in China, Li Auto is one of the top companies to pay attention to due to its substantial growth and decent valuation.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
