Diversification is the key to create a portfolio that consistently beats inflation and index returns. In the current global scenario, an important part of diversification is exposure to global stocks. Over the next few decades, emerging market GDP growth will be higher than that of developed markets.

Of course, massive wealth creators from developed economies will continue. However, it would be a mistake to completely ignore stories from emerging markets. Importantly, global stocks can double from undervalued levels in the second half of the year. And, they are worth holding for the next few years. With positive industry tailwinds and a big addressable market, these growth stories are likely to be potential blue-chips over the next decade.

For now, let’s discuss the reasons to be bullish in the foreseeable future.

Li Auto (LI)

Li Auto (NASDAQ:LI) is among the undervalued EV stocks from the Chinese market. At a forward price-earnings ratio of 15.6, LI stock looks attractive and poised to double in quick time.

Notably, the stock experienced a big rally in the first two months of the year, touching highs of $47. However, the correction was equally swift, and now the stock trades at $30. The reason for the correction is downward revision in vehicle delivery estimates.

From an earlier guidance of 100,000 and 103,000 vehicle delivery for Q1 2024, Li Auto revised the guidance to 76,000 to 78,000 vehicles. Li acknowledged that the “operating strategy of Li MEGA was mis-paced.” Further, the company “put excessive emphasis on sales volume and competition.” The company ended Q1 with deliveries of 80,400 vehicles.

There are ample reasons to be positive on Li Auto. The company ended 2023 with a cash buffer of $14.6 billion. Further, free cash flow (FCF) for Q4 2023 was $2 billion. With healthy growth, FCF is likely to be more than $10 billion this year. Therefore, financial flexibility is high for investment in innovation and aggressive retail expansion.

Coupang (CPNG)

Considering the business developments, Coupang (NYSE:CPNG) has been relatively subdued in the last 12 months. Notably, CPNG stock has corrected from highs of $50 in March 2021. The Korean e-commerce stock is poised to double in the next few quarters.

First, Coupang has ample scope for growth within Korea. In 2023, the Korean e-commerce market was worth $483 billion. The market size is expected to expand to $563 billion by 2027. With steady growth in active customers coupled with upside in average revenue per customer, the company seems well positioned to benefit.

At the same time, Coupang is a margin expansion story. For 2023, the company’s adjusted EBITDA margin was 4.4%. The long-term target is to achieve a margin of 10%. With operating leverage, supply chain optimization, and the scaling of accretive offering, expect margin expansion to sustain in the coming quarters.

Additionally, free cash flow for the trailing-twelve-months was $1.9 billion. This provides ample flexibility to invest in expansion and potential acquisitions. In January 2023, Coupang completed the acquisition of global online luxury company Farfetch Holdings.

Transocean (RIG)

After a deep correction on the back of lower oil prices, Transocean (NYSE:RIG) has surged by 28% in the last month. However, the stock remains sideways in the last 12 months. So, this may be a good time to accumulate for a bigger rally in the coming quarters.

The first reason to be bullish on Transocean is the uptrend in oil. With potential rate cuts, some expect oil to trade above $90 per barrel. This is positive for a provider of offshore drilling services.

Further, Transocean reported an order backlog of $9 billion as of Q4 2023. The queue is front-end loaded and provides clear revenue visibility. Recently, the company announced a new order worth $195 million.

Also, Transocean expects to end 2024 with a healthy liquidity buffer of $1.5 billion. With healthy cash flows likely from the backlog, RIG is positioned to deleverage. Improvement in credit metrics will also translate into stock re-rating.

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.