Power Play: Bullish case for investing in emerging markets

A woman working in a textile factory in Huaibei, China.
STR | AFP | Getty Images
A woman working in a textile factory in Huaibei, China.

Emerging markets have been underperforming U.S. stocks over the past three years, but that may change soon.

"Financial conditions are far better than they were a decade ago, with foreign currency reserves up significantly and far lower levels of foreign currency-denominated debt," Burns McKinney, portfolio manager at NFJ Investment Group, told CNBC's "Power Lunch" on Friday.

He prefers emerging markets stocks with healthy dividends in countries that do not face significant current account deficits.

Read MoreGet picky on emerging markets: Goldman Sachs

A top pick is China. "Equities there trading at 9 times earnings. It is about the cheapest country in the world, other than Russia. We still believe that China can generate consistent 6+ percent GDP growth, and the country can still benefit from the productivity gains associated with continued urbanization of the population," Burns said.

He acknowledges there will still be superior growth in the developing world, but the prospects are brighter now for emerging markets.

MSCI Emerging Markets index lower on Friday, but is up nearly three percent since the beginning of the year.