Fidelity Emerging Markets Limited (FEML) makes use of an extended toolkit: the ability to increase gross exposure; to take both long and short positions in stocks; and to generate additional income and manage risk through options.
By scouring the breadth of the market-cap spectrum for ideas and making use of our excellent team of global analysts, we identify overlooked companies across regions and industries.
Here are three stocks we are especially excited about.
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
Emerging markets: A Latin American bargain
Inter & Co (Nasdaq: INTR) is the holding company for Banco Inter, a Brazilian digital bank and super-app that has started to gain significant scale. With room for further fragmentation across retail banking in Brazil, banks such as Inter, which have strong funding dynamics and have not yet reached their maximum potential market share, stand to benefit. Trading on a price-to-book-value ratio of around 1.3, it’s an example of a great business in Latin America where the share price has been depressed by weak sentiment.
While the fiscal and interest-rate backdrop in Brazil has deteriorated, the broader economic picture is more positive, with unemployment at decade lows, GDP growth robust and credit quality positive. The impact that higher rates will have on Inter’s fundamentals is limited. We expect net interest margins to keep expanding and the cost of risk to remain benign given a tight labour market. All this creates an auspicious backdrop for Inter, which enjoys a strong fundamental position with a great outlook for future profitability.
Buenaventura (NYSE: BVN) is a Peruvian gold and copper miner. The share price has suffered as local pension funds have sold equities to fund large outflows following reforms that allow investors to access their pensions early. However, this obscures a positive fundamental backdrop for the group, which has delivered strong operational performance and upgraded guidance, something that is relatively rare in mining.
We also think that the backdrop for both commodities that Buenaventura mines is very strong. Copper is a particular area of conviction for us, with attractive supply-demand dynamics, underpinned by the copper-intensive energy transition and a very muted supply outlook. Buenaventura is one of the few mining companies with a strong pipeline of development assets, so they can increase copper production into a rising supply/demand deficit. We also think the outlook for gold is attractive. It should benefit as central banks continue to move their foreign-exchange reserves into gold over the next few decades. We see Buenaventura as a high-quality producer that should benefit from a constructive outlook for both metals.
Full speed ahead
Full Truck Alliance (NYSE: YMM) is a digital truck broker in China. The Chinese trucking industry is fragmented, and most truckers operate as independent businesses, meaning FTA should do well as it gains share from offline truck brokers by offering lower logistics costs and efficiencies.
We also see solid potential for FTA’s take rate (the proportion of revenue it retains from the transactions it facilitates) to expand, given this is currently low relative to that of the offline model, and commission is a small expense for truckers.
With 25% of FTA’s market value in cash, we see scope for the firm to raise its payouts to shareholders in the years ahead. The company is trading on a price/ earnings (p/e) ratio of 18, an attractive multiple for an undermonetised business with a monopoly position.
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.
-
Kirill Dmitriev: Putin’s emissary to TrumpworldProfile Kirill Dmitriev is a product of America’s finest institutions and has emerged as the Russian president’s point man in negotiations with Donald Trump
-
Trump’s trade war: market impact as tariffs kick in for Canada, Mexico and ChinaDonald Trump imposed 25% tariffs on Canada and Mexico and doubled the levy on Chinese imports from 10% to 20% on 4 March. What does it mean for markets and the economy – and will the president backtrack?
-
King Coal has not been dethroned yet — should you buy?The demand for coal is only growing, yet investors don’t seem to want to take advantage of the opportunity, says Rupert Hargreaves
-
It’s time to start buying Europe again, says Merryn Somerset WebbOpinion Europe's stocks are cheap and the economic backdrop is starting to look cheerier, says Merryn Somerset Webb
-
Prosus to buy Just Eat for €4.1 billion as takeaway boom fadesFood-delivery platform Just Eat has been gobbled up by a Dutch rival. Now there could be further consolidation in the sector
-
Should investors stay bullish and buy UK and US stocks?Opinion Ignore the Eeyores, says Max King. The outlook for stocks in both Britain and America remains auspicious
-
Leading companies cashing in on India’s compelling growth prospectsOpinion Ewan Thompson, manager of the Liontrust India fund, highlights three companies he thinks are well-positioned to generate attractive economic returns
-
Drone company Red Cat Holdings sees shares tumbleRed Cat, the unprofitable and inefficient US drone manufacturer is set to slide
-
Investors should rise with the dawn of the African centuryAfrica has a troubled history and recent years have been difficult. But conditions are ripe for a turnaround in its fortunes – investors should get in early
-
Majedie sees an impressive turnaround under MaryleboneMajedie Investments, a once-ailing trust has seen its discount shrink to almost nothing under its new manager, Marylebone Partners
