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The sell-off in emerging market stocks has led to new opportunities for investors in this sector. Thanks to the sell-off, you can buy shares in some very well run and fast growing companies at reasonable valuations.

It's clear that India is going to see fast growth for the foreseeable future. The rising middle class in India should lead to strong car sales, and this is why I am interested in buying shares of Tata Motors (TTM). Tata Motors is a diversified automaker based in Mumbai, India. The company makes cars, utility vehicles, trucks, buses and military vehicles. Tata is mostly known for low cost vehicles but that has started to change in the past couple of years.

In 2008 Tata Motors purchased Jaguar and Land Rover from Ford. (You can read more about that deal here.) The deal to buy Jaguar and Land Rover added debt to the balance sheet and it's too early to see if it was a good time to buy these premium automakers. Still, these premium brands have potential, and give Tata Motors immediate access to the luxury car market.

In its most recent quarter, the Jaguar Land Rover division reported a strong jump in sales (about 30% higher) when compared to the same period last year. There is some speculation that TTM will eventually spin off this division (and list the Jaguar Land Rover shares as a spinoff), which could be a future catalyst for the stock. (You can read more about the latest quarter and strong results from the Jaguar Land Rover division here.) TTM recently said it is looking for a partner in China to expand Jaguar Land Rover sales. China could become a major market for these premium brands and add more upside potential to the stock.

TTM shares hit a new 52 week high of $37.65 on November 26, 2010 but have fallen to about $24 recently. Because the 200 day moving average is about $24, there should be solid support at this level, which is why I am comfortable buying shares now. (The 50 day moving average is about $27).

TTM shares pay a dividend of about 30 cents, which is equivalent to ~1.30% yield. Earnings estimates are for just over $3 per share in 2011 and over $3.50 in 2012. These shares have a low PE ratio, and upside potential from rapid growth in emerging markets like China and India.

Some analyst price targets for TTM shares are at the $40 range. It makes sense to accumulate shares at around $24 or less.

Some data is sourced from Yahoo Finance. The information and data is believed to be accurate, but no guarantees or representations are made.

Source: Why Tata Motors Is a Buy on Emerging Market Weakness