NEW YORK (TheStreet) -- The U.S. stock market is in a lull. When I look at the 3,800 or so companies in my Best Stocks Now! universe there have not been a lot of big winners thus far this year.
But when I look beyond the U.S. to the emerging markets, I see some opportunities -- particularly in India where Tata Motors (TTM) is based.
The U.S. market malaise has been partly caused by an outsized gain in the market in 2013 and market valuations that got ahead of themselves. As a result, there has been a flight to safety this year and a greater focus on valuation, favoring value stocks over growth names.
Since the U.S. economy is not on fire, I seek better opportunities elsewhere.
I like is Brazil and own the MSCI Brazil Index Fund (EWZ) exchange-traded fund. Brazil used to be darling of emerging market investors but recent high inflation has crippled the Brazilian consumer. The pro-business party is now leading in the polls and the Brazilian market has rallied 31% since it bottomed in early February.
India is another country benefiting from political reform. Just last week, the pro-business candidate Narendra Modi won in the election. I am looking to add to my India exposure, which is why I think Tata Motors is attractive.
I said "ta-ta" to another automaker, Tesla (TSLA - Get Report) a few months back. I am still a big believer in the Elon Musk story and the companies where he invests including Tesla, SolarCity (SCTY), and SpaceX. But this is quite simply not a favorable market environment for high-valuation stocks.
Comparing Tesla side by side with Tata -- both auto companies have a market capitalization of around $25 billion. But this is a market that favors value stocks. Year-to-date performance is similar but since March Tesla stock has been on the decline while Tata's performance has been steadily on the rise.
TSLA data by YCharts
Telsa is currently trading at 62X forward earnings. Tata Motors, on the other hand, has a low forward PE of only 9X and it is part of an India economy that may be poised to grow at a higher rate than the U.S. economy. Despite its low PE, Tata is expected to grow at 25% rate over the next five years vs Tesla at 40%. Is that marginally better growth rate really worth the disparity in valuation?