Emerging markets provide access to dynamic industries, and resource-rich economies, offering portfolio diversification and reducing dependence on developed markets. These regions are also leveraging technologies like AI and blockchain to boost productivity and modernize industries, enhancing growth prospects.

Given these factors, investors may consider investing in fundamentally strong emerging market stocks such as Petróleo Brasileiro S.A. - Petrobras (PBR), NetEase, Inc. (NTES), and Vale S.A. (VALE) for diversification and growth opportunities.

Emerging markets offer strong growth potential, driven by favorable monetary policies, attractive bond yields, and improving credit ratings. With a projected 3.8% growth in 2025, smaller economies are benefiting from robust domestic demand, supporting infrastructure and social development. These factors make EM-focused ETFs ideal for capturing growth in these regions.

S&P Global forecasts real GDP growth for emerging markets (excluding China) at 3.9% in 2024 and 4.3% in 2025, highlighting strong investment potential. Meanwhile, despite mixed signals from China, its monetary easing and fiscal support have boosted stock valuations, signaling recovery. Additionally, emerging markets benefit from stronger local industries, offering growth resilience amid global trade uncertainties.

Considering these conducive trends, let’s analyze the fundamental aspects of the featured emerging market stocks.

Petróleo Brasileiro S.A. - Petrobras (PBR)

Headquartered in Rio de Janeiro, Brazil, PBR explores, produces, and sells oil and gas both domestically and internationally. The company operates through three segments: Exploration and Production; Refining, Transportation, and Marketing; and Gas and Power.

In terms of the trailing-12-month net income margin, PBR’s 16.81% is 42.7% higher than the 11.78% industry average. Its 21.73% trailing-12-month Return on Common Equity is 76.9% higher than the 12.28% industry average. Moreover, its 7.86% trailing-12-month Return on Total Assets is 50.5% higher than the 5.22% industry average.

During the second quarter, which ended on June 30, 2024, PBR’s sales revenue grew 3.8% year-over-year to R$129.58 billion ($22.47 billion). Its gross profit increased marginally from the prior year to R$66.58 billion ($11.54 billion). Net income reached R$32.68 billion ($5.67 billion), up 22.1% from the year-ago value. Moreover, the company’s adjusted EBITDA stood at R$63.67 billion ($11.04 billion).

Street expects PBR’s EPS for fiscal 2025 to increase 25.8% year-over-year to $3.14. It surpassed the consensus EPS estimate in three of the trailing four quarters. PBR’s stock has gained marginally over the past month to close the last trading session at $14.21.

PBR’s POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It is ranked #6 out of 40 in the A-rated Foreign Oil & Gas industry. It has an A grade for Quality and a B for Momentum and Stability. Click here to see PBR’s Growth, Value, and Sentiment ratings.

NetEase, Inc. (NTES)

Headquartered in Hangzhou, the People's Republic of China, NTES operates internationally in online games, music streaming, online intelligent learning services, and internet content services. The company functions through its Games and Related Value-Added Services, Youdao, Cloud Music, and Innovative Businesses and Others segments.

In terms of the trailing-12-month levered FCF margin, NTES’ 22.45% is 151.2% higher than the 8.94% industry average. Likewise, its 0.59x trailing-12-month asset turnover ratio is 19.7% higher than the industry average of 0.50x. Furthermore, the stock’s 14.88% trailing-12-month Return on Total Assets is 806.3% higher than the industry average of 1.64%.

NTES’ net revenues for the fiscal third quarter ended September 30, 2024, increased 4% year-over-year to RMB27.27 billion ($3.77 billion). Its gross profit grew 3% from the year-ago value to RMB16.97 billion ($2.34 billion).

During the same period, the company’s operating profit rose 5.8% year-over-year to RMB7.56 billion ($1.04 billion). Additionally, its attributable non-GAAP net income stood at RMB7.84 billion ($1.08 billion), or RMB2.41 per share, up 19.9% and 18.7% year-over-year, respectively.

For the quarter ending December 31, 2024, NTES’ EPS is expected to increase 8.4% year-over-year to $1.71. Its revenue for the quarter ending March 31, 2025, is expected to rise 13.5% year-over-year to $4.21 billion. Over the past month, NTES’ stock has gained 4% to close the last trading session at $85.68.

NTES’ robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has a B grade for Value, Stability, and Quality. Within the B-rated China industry, it is ranked #6 out of 44 stocks. Beyond what we stated above, we also have given NTES grades for Growth, Momentum, and Sentiment. Get all the NTES ratings here.

Vale S.A. (VALE)

Headquartered in Rio De Janeiro, Brazil, VALE and its subsidiaries produce and sell iron ore, iron ore pellets, nickel, and copper in Brazil and internationally. The company operates through the Iron Solutions and Energy Transition Materials segments.

On November 13, 2024, VALE announced a multi-year pellet supply agreement with ROGESA to support the steel industry’s decarbonization. The deal includes blast furnace pellets from 2025 to 2027 and a transition to direct reduction pellets from 2028, aiding environmentally friendly steel production using hydrogen.

On October 18, 2024, VALE and Petrobras signed a Strategic Alliance Agreement to provide eco-friendly products like renewable diesel, natural gas, and low-sulfur bunker fuel. This partnership focuses on boosting sustainability and competitiveness in Brazil, with industrial testing of Diesel R5 already in progress.

In terms of the trailing-12-month gross profit margin, VALE’s 39.06% is 35.3% higher than the 28.88% industry average. Likewise, its 19.26% trailing-12-month levered FCF margin is 268.5% higher than the 5.23% industry average. Also, its 9.96% trailing-12-month Return on Total Assets is 313% higher than the 2.41% industry average.

VALE’s net operating revenue for the fiscal third quarter ended September 30, 2024, was $9.55 billion, and operating income totaled $3.68 billion. During the same period, the company’s net income and EPS attributable to VALE’s shareholders were $2.41 billion and $0.56, respectively.

Analysts expect VALE’s EPS for the quarter ending March 31, 2025, to increase 4.6% year-over-year to $0.44. Its revenue for fiscal 2025 is expected to grow 1.5% year-over-year to $39.62 billion. Over the past three months, VALE’s stock has declined 4.7% to close the last trading session at $10.02.

VALE’s promising outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.

It has an A grade for Value and a B for Quality. Within the Industrial - Metals industry, it is ranked #9 out of 30 stocks. To see VALE’s ratings for Growth, Momentum, Stability, and Sentiment, click here.

What To Do Next?

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PBR shares rose $0.02 (+0.14%) in premarket trading Wednesday. Year-to-date, PBR has declined -4.81%, versus a 25.64% rise in the benchmark S&P 500 index during the same period.

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.

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