In emerging markets, the alignment of societal and environmental development with robust financial growth offers attractive investments. Companies across diverse sectors, from electric vehicles to education and finance, are delivering valuable services while offering solid investment opportunities.
Three notable examples vividly highlight this encouraging trend.
1. Samsung SDI
The first is Samsung SDI (Seoul: 006400) in South Korea, a front-runner in the electric vehicle battery sector, reflecting a promising mixture of positive impact and financial growth.
The firm is a key beneficiary of the burgeoning demand for electric vehicles, propelling a vital global shift toward sustainable transportation. It is a battery supplier to key global carmakers such as BMW, Volkswagen, Audi and Volvo. The group’s estimated compound annual revenue growth rate between 2019 and 2024 is expected to be around 19%. Its superior technology and favourable valuation (the stock is on just nine times forward earnings before interest, taxes, depreciation and amortisation – Ebitda) relative to other leading battery manufacturers (such as LG Energy Solution at 16 times forward Ebitda) adds to its investment appeal.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Moreover, as the US strives to diminish its reliance on Chinese suppliers, South Korean ones such as Samsung SDI are likely to benefit both in terms of exports and also through new manufacturing capacity investments in the US, either independently or through joint ventures with carmakers.
2. Laureate Education
Moving to the education sector, Laureate Education (Nasdaq: LAUR) – while headquartered in the US – operates primarily in Mexico and Peru.
We believe private higher and vocational education have a role to play, primarily in emerging markets where limited public funds are best spent on primary education. Affordable higher and vocational education by private companies both play an important part in reducing income disparities and reducing the burden on public finances. Laureate is well-positioned to reap the benefits of US efforts to “nearshore” manufacturing.
The company’s prospective collaborations with corporations aim to bolster Mexico’s skilled workforce, aligning economic growth with societal advancement. Laureate’s solid free cash flow, robust balance sheet and attractive dividend yield of around 5% further underscore its investment appeal, all the while contributing to the vital task of developing education and skills in regions that crave educational advancement and an increasingly skilled workforce.
3. Shriram Finance
Shriram Finance (Mumbai: SHRIRAMFIN) is a compelling investment opportunity in India’s financial arena. Specialising in commercial-vehicle financing, the company facilitates economic activity by enabling essential vehicle acquisitions for small businesses, filling an important gap in the market where traditional banks have not been active.
Active for more than 40 years, Shriram Finance has established longstanding relationships with its clients. The company says that 70%–85% of the vehicles sold work either directly or indirectly in agriculture, most of them being used to transport food across the country. The firm generates a good return on equity (a key gauge of profitability) of 15%, and is one of the more attractively valued financial entities in India, trading on a price/earnings ratio of only 12 – stock valuations are generally high in India compared with other emerging markets.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Disclaimer
This material is not intended as an offer or invitation to purchase or sell any investment.
-
Barclays warns of significant rise in social media investment scamsInvestment scam victims are losing an average £14k, with 61% of those falling for one over social media. Here's how to spot one and keep your money safe
-
Over a thousand savings accounts now offer inflation-busting rates – how long will they stick around?The rate of UK inflation slowed again in March, boosting the opportunity for savers to earn real returns on cash in the bank. But you will need to act fast to secure the best deals.
-
The industry at the heart of global technologyThe semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
-
Three emerging Asian markets to invest inProfessional investor Chetan Sehgal of Templeton Emerging Markets Investment Trust tells us where he’d put his money
-
What to consider before investing in small-cap indexesSmall-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
-
Why space investments are the way to go for investorsSpace investments will change our world beyond recognition, UK investors should take note
-
Time to tap into Africa’s mobile money boomFavourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
-
M&S is back in fashion: but how long can this success last?M&S has exceeded expectations in the past few years, but can it keep up the momentum?
-
The end of China’s boomLike the US, China too got fat on fake money. Now, China's doom is not far away.
-
Magic mushrooms — an investment boom or doom?Investing in these promising medical developments might see you embark on the trip of a lifetime.
