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.
-
What MoneyWeek writers read and watched in 2024Here's a roundup of MoneyWeek's favourite books, films and TV shows in 2024
-
Why Saba is trying to take advantage of UK investment trustsMax King looks at why ever-widening discounts may have created an opportunity for Saba Investments in the UK world of investment trusts
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
How did emerging markets perform in 2024?Emerging markets underperformed their developed counterparts in 2024, but there are signs of recovery. We look at the biggest winners and losers of 2024, and the key trends shaping these markets
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
-
South Korean won hits 15-year low – what it means for 'Korea discount'After Yoon Suk Yeol's failure to declare martial law, South Korean markets are reeling, with the weakest won since 2009. Will this worsen the Korea discount?
-
Why emerging markets are waiting for a weak dollarEmerging markets have had a better year but, like everything else, are still lagging far behind the US
