NEW YORK (TheStreet) - Although some investors remain skeptical of the continued rally in U.S. stocks, the equity market isn't ready to call it quits, according to Jeff Kleintop, chief global strategist at Charles Schwab.
It's because of this pessimism that the market has not yet finished moving higher, Kleintop told TheStreet TV's Gregg Greenberg. Generally, market tops are associated with euphoric investor sentiment.
"I think sentiment is nowhere near as optimistic as we need to see for it to be the top of the market," he added.
Still, investors may look for a less expensive alternative in emerging markets.
iShares Emerging Markets ETF EEM data by YCharts
Emerging markets equities are "one of the few value asset classes out there," he explained. And with a price-to-earnings ratio of just 10, these stocks have an impressive downside buffer. Also, emerging market stocks tend to benefit from an increase in global trade, he said. The strengthening U.S. dollar will help foreign exporters as well.
While Kleintop expects "modest" gains in global equities, not all international regions are worth owning.
In particular, investors should avoid European equities as well as developed Asia, regions which still have "a lot of structural problems," he said.
-- Written by Bret Kenwell