Uncovering Hidden Treasures: Middle Eastern Stocks Poised for Growth in 2025

The Middle East is undergoing a historic shift from oil-dependent economies to diversified powerhouses, fueled by ambitious development plans like Saudi Arabia’s Vision 2030 and UAE’s diversification initiatives. Yet, beneath the surface of headline-grabbing projects lie undervalued stocks primed to reward investors. As of May 2025, select companies across infrastructure, tech, education, and consumer sectors are trading at discounts of 40–70% relative to their growth potential. This article dissects these overlooked opportunities, offering a roadmap for capitalizing on the region’s next wave of growth.

Infrastructure: Building the Future at a Discount

The Middle East’s $350 billion infrastructure pipeline through 2030 is a goldmine for companies like YAMAMA Cement (Saudi Arabia). Despite 38% earnings growth in 2024 and minimal debt (35.7% debt-to-equity), its shares trade at 71% below fair value, offering a rare entry point.

Meanwhile, Ackerstein Group (Israel) is capitalizing on Israel’s urbanization, posting 32% YoY earnings growth with near-zero leverage (2.1% debt-to-equity). Both firms are beneficiaries of long-term government spending, insulated from cyclical downturns.

Tech & IT: Digital Transformation’s Quiet Winners

While global tech stocks face headwinds, Middle Eastern firms like Formula Systems (FORTY, Israel) are undervalued at a 17.2x P/E ratio—below the sector average of 19x. The IT solutions provider has delivered 12.6% CAGR over five years and hiked dividends to ₪3.45/share, balancing growth and income.

NextVision Stabilized Systems (Israel) is a standout: its 140.8% YoY earnings growth and debt-free balance sheet position it to dominate the $1.2 billion global stabilized camera market. Yet it trades 48% below fair value, offering asymmetric upside.

Consumer Staples: Thriving Amid Inflation

Discount retailers like Delta Israel (Israel) are thriving as consumers prioritize affordability. With 26% YoY revenue growth and zero debt, Delta’s valuation lags its growth trajectory, making it a proxy for Israel’s resilient retail sector.

Education & Telecom: Steady Earnings in Volatile Markets

National Company for Learning and Education (Saudi Arabia) is a rare growth story in education, with 71.9% YoY net income growth and sales up 16% to SAR164.06 million in Q2 2025. Its 4% debt-to-equity ratio underscores financial prudence, yet it trades at a discount to its 16% market share in Saudi education.

In telecom, Saudi Telecom Company (STC) offers a 9.40% dividend yield despite operating in a shrinking sector. Its pivot to fintech and entertainment, alongside a 65.4% payout ratio, makes it a defensive pick in a volatile market.

Banking: Dividends in a Strong Balance Sheet

National Bank of Ras Al-Khaimah (RAKBANK, UAE) has slashed its debt-to-equity ratio to 48.5% from 1,796% over five years, enabling an 8.06% dividend yield. With non-performing loans at just 2.2%, RAKBANK is a testament to UAE banking’s recovery—and a bargain at current levels.

Key Metrics for Selecting Gems

• Debt Discipline: Prioritize firms with debt-to-equity <30% (e.g., YAMAMA Cement at 35.7%, Pera Yatirim at 1.1%).
• Safety: Look for interest coverage >7x (e.g., Palram Industries at 87x).
• Valuation: Target P/E ratios below sector averages (e.g., Formula Systems at 17.2x vs. 19x).

The Case for Immediate Action

The Middle East’s undervalued stocks are not merely bargains—they’re leveraged to secular trends. Infrastructure firms benefit from megaprojects like the Red Sea Development, tech companies from digital adoption, and discount retailers from inflation-driven demand. Even in sectors like telecom, STC’s diversification into high-margin businesses provides a floor.

Conclusion: A 15–25% Upside Awaits

The Q2 2025 data paints a clear picture: NextVision Stabilized Systems, YAMAMA Cement, and Formula Systems are the cream of the crop, with fair-value estimates suggesting 15–25% upside. These companies combine strong fundamentals, strategic alignment with regional growth, and valuation discounts that defy their earnings momentum.

Investors should proceed selectively, favoring firms with low leverage, resilient cash flows, and secular tailwinds. While geopolitical risks and oil price volatility loom, the Middle East’s shift toward tech, education, and infrastructure ensures these stocks are more than just cyclical plays—they’re building blocks for the region’s next decade of growth.

Note: Excludes oil-linked stocks. Data as of Q2 2025 reports. Always conduct independent research and consult a financial advisor before investing.