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Shweta Kumari

3 Emerging Market Stocks with Promising Prospects

Amid shifting geopolitical dynamics and the Republicans’ tariff-driven policies, emerging market stocks are gaining traction. The MSCI Emerging Markets Investable Market Index has risen 3.3% year-to-date, reflecting renewed investor interest.

Given this backdrop, investors may consider investing in fundamentally strong emerging market stocks such as Infosys Limited (INFY), Sea Limited (SE), and Vale S.A. (VALE), which are poised to capitalize on their solid prospects.

Since the Republicans took office on January 20, U.S. trade policy has taken center stage, sending ripples across global markets. The new administration’s tariff proposals and immigration reforms are adding fresh uncertainties, particularly for economies heavily reliant on U.S. trade, such as Mexico and China. Meanwhile, China’s AI breakthrough with DeepSeek has rattled U.S. tech stocks, further intensifying economic tensions.

As a result, investors are reassessing their portfolios, seeking markets less exposed to U.S. policy risks. For instance, India, with its largely self-sustained economy and strategic positioning, is emerging as a favorable alternative. Conversely, Brazil is poised to capitalize on potential shifts in agricultural demand, as trade realignments could benefit its exports.

According to S&P Global, EMs are projected to drive global economic growth over the next decade, with an average GDP growth rate of 4.06% through 2035, compared to just 1.59% for advanced economies. Moreover, these markets are likely to contribute 65% of global growth, with economies like China, India, Vietnam, and the Philippines leading the charge.

Furthermore, investors’ interest in emerging market stocks is evident from the iShares MSCI Emerging Markets ETF’s (EEM) 6.3% returns over the past six months. For those looking to tap into this momentum, companies like INFY, SE, and VALE offer strong fundamentals and the potential for continued growth in the evolving global market. Let’s discuss them in detail:

Infosys Limited (INFY)

Headquartered in Bengaluru, India, INFY provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, India, and internationally.

On January 29, 2025, INFY announced an expanded strategic collaboration with Siemens AG to accelerate its digital learning initiatives with generative AI. Under this, Siemens’ My Learning World platform will integrate Infosys Topaz and Infosys Wingspan, providing over 250,000 Siemens employees with AI-powered upskilling opportunities.

This initiative leverages Infosys’ advanced learning technologies and reinforces the company’s role in transforming enterprise learning, enhancing workforce development, and delivering personalized growth experiences globally.

The stock’s trailing 12-month EBITDA margin of 23.08% is 120.3% higher than the 10.48% industry average. INFY’s 17.29% trailing-12-month net income margin is 317.1% higher than the 4.14% industry average. Likewise, its trailing-12-month ROCE of 33.17% compares to the industry average of 4.84%.

For the fiscal third quarter ended December 31, 2024, INFY’s revenues amounted to $4.94 billion, up 5.9% year-over-year. Its gross profit rose 7.6% over the prior-year quarter to $1.49 billion. The company’s net profit and EPS came at $806 million and $0.19, representing an increase of 9.8% and 5.6% year-over-year, respectively. As of December 31, 2024, its cash and cash equivalents stood at $2.66 billion, compared to $1.77 billion as of March 31, 2024.

Street expects INFY’s revenue for the fourth quarter (ending March 2025) to increase 7.1% year-over-year to $4.86 billion, while its EPS is estimated to come in at $0.19. Moreover, the company has topped the consensus revenue estimates in three of the trailing four quarters, which is promising.

The stock has gained 28.6% over the past nine months to close the last trading session at $21.83.

INFY’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has an A grade for Stability and Quality and a B for Momentum. Among nine stocks in the A-rated Outsourcing – Tech Services industry, it is ranked #5. Click here to see additional ratings for INFY (Growth, Value, and Sentiment).

Sea Limited (SE)

SE operates as a consumer internet company through its e-commerce, digital financial services, and digital entertainment segments. Through its core businesses, Garena, Shopee, and SeaMoney, it caters to a wide range of digital consumers in Southeast Asia, Latin America, and other global markets.

In terms of the trailing-12-month levered FCF margin, SE’s 11.08% is 24.6% higher than the 8.89% industry average. Also, its trailing-12-month asset turnover ratio of 0.78x exceeds the industry average of 0.49x by 59.4%.

During the fiscal third quarter (ended September 30, 2024), SE’s revenue increased 30.8% year-over-year to $4.33 billion, while the company’s digital entertainment segment generated a revenue of $2.42 billion, up 41.2% from the prior-year quarter. Its gross profit increased 29.1% year-over-year to $1.86 billion. In addition, its net income and EPS for the quarter stood at $153.32 million and $0.24 compared to the year-ago loss of $143.98 million and $0.26, respectively.

The consensus revenue estimate of $4.64 billion for the fiscal fourth quarter (ended December 2024) represents a 28.4% increase year-over-year. The consensus EPS estimate of $0.69 for the same period indicates a significant improvement from the prior-year quarter. The company has an impressive surprise history; it surpassed the consensus revenue estimates in each of the trailing four quarters.

SE shares have gained 190.2% over the past year and 15.9% year-to-date to close the last trading session at $123.

It is no surprise that SE has an overall rating of B, which is equivalent to a Buy in our POWR Ratings system. It has an A grade for Growth and a B for Momentum, Sentiment, and Quality. Out of 48 stocks in the A-rated Internet industry, it is ranked #22.

In addition to the POWR Rating grades I’ve just highlighted, you can see SE’s Value and Stability ratings here.

Vale S.A. (VALE)

Headquartered in Rio De Janeiro, Brazil, VALE produces iron ore and nickel through its Iron Solutions and Energy Transition Materials segments. The company also produces iron ore pellets, copper, platinum group metals (PGMs), gold, silver, and cobalt.

On January 16, 2025, VALE signed a land reservation agreement with the Royal Commission of Jubail and Yanbu to develop a multi-million-dollar Mega Hub at Ras Al-Khair Industrial City in Saudi Arabia. The project, which will be completed in two phases, could produce up to 12 million tons of cold-briquette iron ore (CBI) annually, accelerating the transition to net-zero steelmaking.

In the same month, the company signed a Memorandum of Understanding (MOU) with GreenIron to advance decarbonization efforts in Brazil and Sweden. The partnership aims to explore the feasibility of GreenIron's direct reduction facility in Brazil while also ensuring VALE’s iron ore supply to GreenIron’s commercial operations in Sweden.

The stock’s trailing 12-month gross profit margin of 39.06% is 33.9% higher than the industry average of 29.17%. Similarly, its trailing-12-month net income margin and ROCE of 22.86% and 24.20%  favorbaly compare to their respective industry averages of 4.86% and 6.06%.

VALE’s net operating revenue for the third quarter ended September 30, 2024, amounted to $9.55 billion, while its operating income increased 12% from the year-ago value to $3.67 billion. The company’s attributable net income and EPS for the quarter stood at $2.41 billion and $0.56, respectively. In addition, its iron ore shipments increased by 1.3 Mt, driven by an 18% rise in pellet sales due to higher production and strong demand.

Analysts expect VALE’s EPS for the current year ending December 2025 to increase 4.7% year-over-year to $2.03, while its revenue for the same period is expected to grow marginally from the prior year to $38.23 billion.

Over the past month, the stock has gained 9.9%, closing the last trading session at $9.47.

VALE’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has an A grade for Value and a B for Quality. It is ranked #12 among 32 stocks in the Industrial - Metals industry. Click here to see other VALE’s ratings for Growth, Momentum, Stability, and Sentiment.

What To Do Next?

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INFY shares . Year-to-date, INFY has declined -0.41%, versus a 2.51% rise in the benchmark S&P 500 index during the same period.



About the Author: Shweta Kumari


Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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