Trading Nation

Forget the US — the stock market bargains are now international: Meb Faber

For investment value, look international: Meb Faber

The best stocks may not be in the U.S. at all, according to one strategist who sees opportunities for growth abroad in relatively cheap markets.

Particularly low-valued markets like those of Brazil and Russia, with low cyclically adjusted price-earnings ratios, are good buys, according to Meb Faber, chief investment officer of Cambria Investment Management.

The CAPE ratio measures stocks' valuations, adjusted for inflation, by dividing a stock's price by the average of its 10 years of earnings. The CAPE ratio of the United States is about 26, whereas Russia's is about 5.

"If you look at a bucket of the 10 cheapest countries, you're looking at a P/E ratio on that bucket of around 10; but then again, you're buying names like Brazil and Russia, a lot of Europe, which has been really hard to do over the last few years," Faber said Thursday on CNBC's "Trading Nation."

"So you're starting to see some of the momentum and trends change, and we think there's a lot of room to run, because these valuations in the cheap bucket are about as half as the expensive bucket," Faber added.

The iShares MSCI Brazil ETF, the EWZ, has gained about 72 percent year to date, and the VanEck Vectors Russia ETF, the RSX, is up about 23 percent this year.

Assessing risk in emerging markets can be particularly tricky, but is increasingly important for investors, according to Max Wolff, market strategist at 55 Capital, an investment firm focused on managing global portfolios using ETFs.

"We sort of think we're in a new era here. The new era is really risk; the returns are, ironically, to better risk management," Wolff said Thursday on "Trading Nation."

"So what we're trying to do is to make adjustments to a really global, diversified outlook expressed in terms of ETF holdings that says something about where we think things are going relatively," Wolff said.