I have a positive outlook for the U.S. markets for the year. My view is backed by potential rate cuts in the coming quarters that would support investment and consumption spending in the economy. However, irrespective of the outlook for the United States, it’s important to have exposure to emerging market stocks.
Emerging markets will likely grow faster than most developed markets through the decade as the global economy improves. Therefore, there will be several multibagger opportunities from the Asian markets. In my view, at least 20% to 25% portfolio exposure can be towards high-growth economies.
This column talks about three emerging market stocks likely to double in 2024. I further believe these stocks represent growth stories worth holding for the next few years. Let’s discuss the reasons to be bullish.
Li Auto (LI)
Li Auto (NASDAQ:LI) continues to surprise with record EV delivery numbers. Despite the company’s growth, LI stock has dropped by 4% in the last six months. I expect this Chinese EV Company to be a massive value creator in 2024 and beyond. A forward price-earnings ratio of 34 underscores my view on the valuation gap for this high-growth company.
To put things into perspective, Li Auto delivered 131,805 cars in Q4 2023. On a year-on-year basis, deliveries surged by 184.6%. I believe strong deliveries will be sustained this year due to new launches and aggressive retail network expansion. The company expects to commence mass deliveries of Li MEGA in March.
Li Auto reported cash and equivalents of $12.13 billion as of Q3 2023. This provides high financial flexibility. It’s also likely that Li Auto will explore international expansion this year. Amidst these positives, LI stock trades at a valuation gap and is poised to surge higher.
Coupang (CPNG)
Coupang (NYSE:CPNG) stock has appreciated marginally in the last 12 months. The e-commerce Company has ample growth potential and CPNG stock is undervalued. A 100% rally in 2024 seems possible after an extended period of consolidation.
I want to highlight two points from the company’s business and financial metrics. First, Coupang reported 20 million active customers as of Q3 2023, which was higher by 14% year-over-year. Coupang reported a free cash flow of $1.9 billion in the trailing twelve months. With operating leverage and average revenue per user growth, key margins are likely to improve. At the same time, free cash flows will swell.
Coupang is in South Korea, Taiwan, Singapore, China, and India. Exposure to high-growth markets can imply growth acceleration in the coming years. After valuation adjustments in a post-pandemic world, CPNG stock seems poised for a meaningful rally.
MakeMyTrip (MMYT)
India seems to be among the most exciting investment destinations for the decade. With one of the best demographics in the world and a swelling middle class, India is poised for healthy GDP growth. One sector that has immense potential is travel and tourism. MakeMyTrip (NASDAQ:MMYT) stock is possibly the best way to consider exposure to this sector in India.
The company is an online seller of travel products and solutions. This includes air ticketing, holiday bookings, hotels, and bus ticketing. Operating margin expansion helped MMYT stock surge by 67% in the last 12 months. The growth stock remains attractive and can double from current levels this year.
It’s worth noting that MakeMyTrip has created an umbrella of online travel and tourism brands through acquisitions. As of September, the company reported $538.1 million in cash and equivalents. This provides a buffer for potential acquisitions and investment in the online travel platform. I am bullish on stellar growth and continued margin expansion.
On the date of publication, Faisal Humayun 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.
