BLACKROCK: Emerging Market Stocks Are Still Way Cheaper Than US Stocks

As stocks in the U.S. have been hitting all-time highs, some are wondering if there is a major correction coming.

BlackRock chief investment strategist Russ Koesterich points out that emerging market stocks still look cheap - considering their potential for growth and improved corporate profits - especially when compared with U.S. stocks.

"Despite the recent emerging market stock rebound, EM equities were still trading at a 36% discount to U.S. stocks, and below their three-year average valuation, as of October 10, 2013, as measured by price-to-book ratios," says Koesterich.

Earlier this year, BlackRock's Jeff Shen and Rodolfo Martell argued that "for investors who want to develop their portfolios, the developing world is an unmatched source of potential."

Koesterich likes emerging market stocks over the next three to five years.