Where some see dross, others spy gold. Case in point: BRICs.

BRICs — primarily Brazil, Russia, India and China — comprise some of the largest and most-developed global emerging markets, not fared well overall this year. But they are once again being considered by investors as they take a closer look at some battered, and possibly bargain-priced, stocks.

Overall, many investors have been fleeing emerging markets. For the first seven months of the year, emerging market equity funds had a net outflow of $4.5 billion, as global investors scurried back to the US and Europe, lured by the idea that US interest rates could rise — a boon to investment returns — if the Federal Reserve winds down its long-running stimulus program, as widely expected.

But the decline among emerging markets stocks may be leaving some golden buying opportunities, say some experts, especially among the BRICs. Those powerhouse economies, including the core four BRIC countries, have strong fundamentals that can insulate them from some of the broader volatility. Those fundamentals include a large and expanding middle class and increasingly sophisticated, acquisition-minded companies.

They also have strong gross domestic production (GDP), the measure of the value of goods and services produced within the country’s borders.  Overall, measured by purchasing-price-parity adjusted GDP, emerging markets will create $1.6 trillion more goods and services than advanced markets in 2013, according to the International Monetary Fund.

“Cheap”

A recent JP Morgan Asset Management emerging market research report noted that BRIC stocks currently look quite “cheap,” as country valuations hover near the bottom end of historical valuation ranges. All four BRIC countries will have higher GDP growth than the US this year, according to JP Morgan.

China and Russia have relatively low debt, 31% and 12%, respectively. And China’s ample international reserves total nearly $3.5 trillion. Both countries’ GDPs are also growing: China’s growth will hit 8% this year, Russia’s 3.4%.

Though there’s no sign of a comeback yet — for the first seven months of this year, the MSCI BRIC Index has plummeted 11.21% — some investors and big emerging market mutual funds, like ones run by T Rowe Price, are bargain hunting.

“We accept some risk in short-term pain,” said Todd Henry, emerging market equity portfolio specialist at Maryland-based T Rowe Price. “But opportunity is there in growth.”

BRIC stocks make up nearly 50% of The T Rowe Price Emerging Markets Stock Fund’s $7.2 billion in assets. The fund is adding to its BRIC holdings, especially the Russian and Indian stock allocations.

Chinese stocks also don’t look expensive right now, Henry said. In late August, the MSCI China Index price-to-earnings ratio (P/E) — a measure of how expensive a stock is — was only 9.75, versus 11.90 for emerging markets. Currently, the fund favours environmental companies such as wind producer China Longyuan Power Group Corp Ltd and gas company Beijing Enterprises.

Despite India’s plummeting rupee, the country is also high on some investors emerging market stock lists.

“India is becoming a huge buying opportunity,” said Peter Kohli, president of Pennsylvania-based DMS Funds. “The stock market is just taking a breather, but it will come back again.”

The reason, he added, is that India has about 10 years of above-average growth left, partly driven by a huge, acquisition-minded middle class. Indian multinational companies such as Tata Group, Wipro Ltd and Mahindra & Mahindra Ltd will have strong earnings, he said. A depreciated rupee means these companies are now on sale for emerging market investors, he added.

Who should invest?

Bedevilled by wild swings, emerging markets are typically best as part of well-diversified portfolios, or for value-hungry investors with reasonably long investment horizons. The small sizes of most emerging market economies mean they are vulnerable to the vagaries of global investors.

“In the past, these huge investor inflows have helped prop up countries like Thailand and Vietnam,” said Jonathan Galaviz, a managing director at the Nevada-based strategy and research consultancy Galaviz & Co. “For this reason, economies in Asia have been over-heating for the past five years.”

That is beginning to change. For instance, Thailand’s GDP growth is expected to slow to 4.2% in 2014 from 5.9% this year.

Unlike smaller emerging markets, BRICs benefit from being big, diversified economies with highly liquid markets. Even so, they’re best played by using ETFs, say many experts. There are several BRIC ETFs to choose from, including country-specific ones like Market Vectors Russia ETF or the iShares MSCI India Small-Cap ETF.

Alan Miller, chief investment officer at the London-based investment management firm SCM Private, also prefers ETFs. A contrarian investor, he is eyeballing investments in emerging market BRICs like Russia. One reason: The MSCI Russia Index P/E is only 5. “Yet Russia’s earnings growth isn’t falling off a cliff,” he added.

Some other emerging market experts are looking further afield. Philippe Carre, global head of connectivity for SunGard’s Global Trading Business, says that some Eastern Europe countries, especially Poland and Rumania, are becoming star performers. These post-Soviet countries are seeing their exchanges grow, as more companies are listed.

Yet even Carre isn’t immune to the lures of some of the BRICs. “It’s hard to avoid economic locomotives like China,” he said.