Global markets are taking off, but emerging-market stocks remain far below last year's highs, and some investors are warming to their valuations.

The emerging-market bulls argue that cheap prices and healthy growth rates mean that companies in Asia and elsewhere have the potential for bigger gains in coming months, should the current breather in the euro crisis hold.

After Friday's jobs-inspired rally, the Standard & Poor's 500-stock index is now just 1.4% below its peak since the Lehman crisis, which was hit April 29. Outside the U.S., the MSCI Emerging Markets index was up 14% this year, but still 13% below its May 2011 post-crisis high. The MSCI EAFE, which measures developed markets outside North America, is up 8%, yet remains 15% below its May post-crisis high.

'It's nowhere near done. There's still a massive undervaluation' in stocks, says Bill Maldonado, chief investment officer for HSBC Global Asset Management in the Asia-Pacific region, which has about $80 billion of stocks and bonds under management. He has been sticking with the economically sensitive businesses, such as energy, industrial and consumer-spending-oriented companies, that were battered last year when fear the European crisis would worsen led investors to sell what he sees as fundamentally good stocks.

Current valuations present a 'once-in-a-five- or 10-year opportunity' to buy Asian stocks in materials, energy and consumer goods, he says, adding that the level of expectations for company earnings, while ratcheted down from earlier forecasts, 'more than supports current valuations.'

Stocks in the fast-growing economies in Asia outside Japan are earning more per share than they did in 2008. Yet investors are valuing them at 12 times 10-year trailing earnings