Top-Performing Emerging-Market Stocks

NEW YORK (TheStreet) -- The U.S. blue-chip indices S&P 500 Index and Dow Jones each closed 0.1% lower, when juxtaposed with the significant positive performance of the emerging markets. Among emerging markets, the Shanghai Composite clocked highest gains, up 4.9%, as China's exports recorded higher-than-estimated growth of 38%. India's Nifty and Brazil's Bovespa followed, rising 5.2% and 4.2%, respectively.

The major cause of the decline in U.S. exchanges was surging crude prices, as the political unrest flaring across the Middle East could be a major drag on economic recovery. Head of Investment Services at JPMorgan Asset Management believes that rising crude prices are unlikely to derail economic recovery in emerging markets. Further, the decline in EMs may not be as hard as that expected in developed markets for the simple reason that EMs have a greater capacity to absorb spiking crude prices as economic growth in these countries seems much faster than the developed nations.

As per research company EPFR, emerging market equity funds reported net outflows of $2.5 billion during the week Feb. 23 to March 2, compared to $1.9 billion in the prior week. Meanwhile, as geopolitical worries in the Middle East escalate, rising crude prices could pressure inflation rates in the developing economies' inflation rates it is estimated equities may face a fall in the upcoming few months.

Meanwhile, findings of a research study from BarCap indicate that oil price increases would increase current account balance of a few of the emerging market economies' or would have a minimal adverse impact on the same.

A few emerging market ADRs generated lucrative returns for investors during the past one month, while a few, as per analysts' estimates, have potential upsides in the next 12 months. We present 10 such stocks, which gained 11%-89% in the past month.

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10. Giant Interactive ( GA) is a China-based online game developer and operator. The company focuses on massively multiplayer online (MMO) games that are played through networked game servers, in which a number of players are able to connect and interact simultaneously. The stock gained 11.1% during the past one month.

Of the 16 analysts covering the stock, 44% recommend a buy while 44% suggest a hold. Analysts polled by Bloomberg expect the stock to gain an average 5.1% to $8.2 in the upcoming 12 months.

For 2010 fourth quarter, the company's net profit surged 17% to $35 million on improved revenue. Excluding stock-based compensation, earnings per share increased 18.4% to 16 cents. Net revenue multiplied to $55.8 million, mainly generated from its ZT online series gaming. Meanwhile, during the quarter, active subscriptions for online games were up 49% to 1.7 million, compared to the year earlier. The company recently declared a cash dividend of 18 cents per share on its outstanding shares.

For 2011 first quarter, the company expects sequential growth in its top-line. A strategy to expand the online games market coupled with effective cost structures will generate attractive results in the year to come. In addition, in the second quarter of 2011, the company plans to conduct additional testing for Dragon Soul, a game launched in 2010 fourth quarter. This game would extend beyond the home market.

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9. Yanzhou Coal Mining ( YZC) engages in mining, preparation, sale and railway transportation of coal. The company own and operates six coalmines and through its subsidiaries has interest in coalmines in China and Australia. Yanzhou's product line includes thermal coal, semi-soft coking coal and semi-hard coking coal. The stock gained 11.5% during the past one month.

Yanzhou recently participated and won in a bid for acquiring mining rights in a coalmine zone in China through its unit Yanzhou Coal Ordos Neng Hua. The board approved to bid for the coal field for a value not exceeding $1.3 billion. The Zhuanlongwan coalmine, which is located in the Dongsheng coal field in Inner Mongolia, has total coal reserves of 548 million tonnes and is designed to produce 5 million tonnes of coal every year.

Yanzhou's parent company Yankuang Group is targeting to produce 80 million tonnes of coal in 2011, compared to 60 million tonnes in 2010. Furthermore, Yanzhou's chairman said the company is seeking to increase annual coal output to 150 million tonnes by 2015 and expects to generate $18.2 billion in sales revenue and $4.9 billion in pre-tax profit in 2015. The company plans to launch a group listing in 2011.

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8. Companhia Energetica de Minas Gerais (Cemig) ( CIG), a Brazil-based electric utility, engages in the generation, transmission and distribution of electricity. Besides, it is also distributes natural gas, telecommunications, and energy solutions. The stock advanced 11.7% during the past one month.

Of the six analysts covering the stock, 83% rated a buy while the remaining advised a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg expect the stock to increase by an average 29.6% to $23.1 in the upcoming 12 months.

Dividend payout for 2010 was 77 cents per share. Early January, shareholders received a special dividend of 79 cents per share -- double that of ordinary dividend. Cemig, Brazil's top electricity distributor, is likely to benefit from the approximate 10% hike in electricity tariff in 2011, which analyst believe will remain stagnant until 2013, and rise by an additional 10% in 2014.

On an average, analysts estimate Cemig's revenue to grow 10% to $7.5 billion and earnings per share by a huge 20%. The company's return on equity and assets are nearly double the industry average, thereby attracting investors.

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7. HDFC Bank ( HDB) is an India-based banking major with operations in retail banking, wholesale banking and treasury. It has two subsidiaries -- HDFC Securities Limited (HSL) and HDB Financial Services Limited (HDBFS). The stock rose 11.8% during the past month.

The stock received 50% buy ratings from analysts. There are no sell ratings on the stock. On an average, analysts polled by Bloomberg expect the stock to gain 22.4% to $195 in the upcoming 12 months.

For its latest third quarter, HDFC reported net income of $1.4 billion, up 28.9% from the year-ago quarter. Net interest income was up 24.9%, while non-interest revenue accumulated 25.4% during the same period.

A bank official recently said HDFC is focusing on growth and achieving future targets organically. Further, the bank does not feel the need for any kind of acquisition now, nor does it require any additional funds. Meanwhile, the bank is relying on the launch of 3G services in India to boost its mobile banking share.

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6. Petroleo Brasileiro ( PBR) is an integrated oil and gas company operating in five business segments: exploration and production; refining, transportation and marketing; distribution; gas and power, and international. The stock gained 12.2% during the last one month.

Of the 17 analysts covering the stock, 59% recommend a buy while the remaining rate a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg foresee the stock gaining an average 9.8% to $44.4 in the upcoming 12 months.

The company said 2010 fourth quarter was a milestone in its history, as net income grew 38% to $6.4 billion. For full-year 2010, net income increased 17%. During the same quarter, the company cut down expenses by $300 million as it reduced its exploration costs. For the first time in Dec. 2010, the company's daily production in Brazil exceeded 2 million barrels, securing its production target.

In 2011, the company expects key developments with 12 rigs working in the Lula Pilot area by the end of the year. Drilling of another 20 wells, almost double that forecasted earlier, will be completed soon. Moreover, the company expects to complete its gas infrastructure by the first half of 2011.

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5. Focus Media Holdings ( FMCN) is a multi-platform digital media company operating networks including liquid crystal display (LCD) display, poster frame, in-store, Internet advertising services, billboard and movie theater advertising. The stock accumulated 15.9% during the past one month.

Of the 14 analysts covering the stock, 64% recommend a buy while 29% suggest a hold. Analysts polled by Bloomberg expect the stock to gain an average 12.3% to $32.6 in the upcoming 12 months.

For the fourth quarter ending Dec. 31, 2010, the company swung to a net profit of $47.2 million, or 33 cents per share, as compared to a loss of $57 million, or 42 cents, in the year-ago quarter. Revenue grew 44% to $159.7 million during the same period. In Dec. 2010, the company invested $61 million for buying a 15% stake in VisionChina Media, which has audiences in China's top 23 cities, to complement its business, to expand its outreach, and for generating attractive results.

For 2011 first quarter, the company pegs net revenue from its core business in the range of $122 to $124 million, while that from non-core business between $10 and $11 million. Non-GAAP net income is seen in the range of $36 to $38 million.

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4. Silvercorp Metals ( SVM) is a silver producer with properties including the Ying Mine (77.5%), HPG Property (80%), TLP Mine (77.5%), LM Mine (80%), Nabao Project (82%), GC Project (95%) and Silvertip Project (100%). The stock accumulated 20.8% during the past one month.

Of the five analysts covering the stock, 80% recommend a buy while the remaining rate a hold. There are no sell ratings on the stock. Data from Bloomberg has analysts forecasting 2% gain to $14.8 in the upcoming 12 months.

For the latest third quarter, the company reported net profit of $29.7 million, or 18 cents per share, compared to $12.4 million, or 8 cents per share, in the year ago period. The company posted better-than-expected results on the back of soaring metal prices. Revenue jumped 65.5% to $51.8 million with silver sales growing 25% to 1.52 million ounces at an average realized price of $20.36 an ounce, up 57%.

For fiscal ending March 31, 2011, the company expects silver production from its four mines at the Ying Mining Camp to meet or exceed 5.6 million ounces. Besides, for 2012 the company has planned three projects in China, incurring capital expenditure of $67 million.

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3. Sify Technologies ( SIFY) is an integrated internet company, providing network and ecommerce services in India. The company operates in four segments: corporate network/data services, Internet access services for homes, through cybercafés, online portal services, content offerings, and other services like development of e-learning software. The stock gained 25.7% during the past one month.

For the quarter ended Dec. 31, 2010, Sify's promoters invested $21.7 million to improve liquidity and to fund data center and network expansion. Total operating revenue stood at $38.72 million with its infrastructure/hosting business growing 26.4% year-over-year.

Sify recently became the first ICT player in India to activate its capacities in the Europe-India Gateway (EIG) submarine cable system. The EIG is a $700 million high-capacity fiber-optic cable and one of the most advanced submarine cable systems in the world. Sify's partnership with GBI (Gulf Bridge International) to land their Cable System in India will go onboard from the second half of 2011.

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2. KongZhong ( KONG) engages in providing digital entertainment services for consumers in China. The company operates through four business units: wireless value-added services (WVAS), wireless Internet services (WIS), mobile games, and online games. The stock accumulated 31.9% during the past one month.

Of the five analysts covering the stock, 80% recommend a buy while the remaining rate a hold. There are no sell ratings on the stock. Data from Bloomberg has analysts forecasting 4.7% gain to $9.7 in the upcoming 12 months.

For the fourth quarter ended Dec. 31, 2010, the company reported 5% year-over-year increase in total revenue to $36 million. Net income for the quarter surged 149% to $5.01 million, compared to the year-ago quarter. For full-year 2010, revenue and non-GAAP net income were up 14% and 13%, respectively from 2009.

Revenue guidance for 2011 first quarter is in the range of $38.5 to $39.5 million. Kong estimates net profit of $2-$3 million, including $1.6 million as non-cash expenses related to the early extinguishment of the portion of Nokia Growth Partners' convertible notes prepaid. Furthermore, non-GAAP net profit is seen between $6 and $7 million. Meanwhile, the company believes that its mobile games will drive China's mobile games market in 2011.

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1. ATA ( ATAI) is a China-based provider of computer-based testing services. The company offers services for the creation and delivery of computer-based tests utilizing the test-delivery platform, testing technologies and providing testing services. The stock surged 89% during the last one month.

For the third quarter ended Dec. 31, 2010, ATA's net income increased 384.2% to $4.7 million, or 22 cents per share. Net revenue for the quarter soared 77% year-over-year to $20.6 million, led by higher revenue from testing services and test preparation and training solutions. During the quarter, the company delivered 3 million tests, up 100.5% from the same quarter in the prior year.

Heading into 2011, ATAI estimates net revenue in the range of $42.7 to $45.7 million, a projected year-over-year increase of 14.3% to 22.4%. Analysts at Zacks Investment Research recently upgraded the stock to outperform from the earlier neutral rating.

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