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J.P. Morgan Cazenove said on Monday that now is a good time for investors to add to investments in emerging and global markets.

We held a cautious stance on EM plays for more than two years, favoring euro recovery theme, but have last month started to add to the space, J.P. Morgans European equity-research team said in a note.

While emerging-markets gurus like Mark Mobius and Jim ONeill have remained bullish, the data have over the past years painted a more downbeat picture. EM equities underperformed developed stock markets by more than 35% since their relative peak in October 2010, according to J.P. Morgan. Buts thats about to change. Stocks in emerging markets have already performed well this year and are up 5% this year, which is in line with their developed cousins.

Now growth is picking up globally. J.P. Morgans flash global manufacturing PMI last week moved to a three-year high and the Chinese factory sector is back in expansion territory. On top of that, the U.S. should rebound from its first-quarter slump, the analysts said, and recent activity indicators already point to much stronger growth ahead.

This is where emerging markets come in. They are poised to benefit from the stronger global growth outlook and coupled with low valuations right now EM equities are outright attractive in J.P. Morgans view. So attractive, the analysts actually think they are trading at a 28% discount to developed markets.

As the global and EM activity backdrop improves, we think these valuations may start to look increasingly compelling to investors, they said in the note.

This is not just good news for companies traded in developing economies, but also for global stocks with EM exposure. To reflect that, the analysts upgraded chemicals to neutral from underweight and capital goods to overweight from neutral.

Both of these sectors have lagged the market over the past year. Both are heavily leveraged to a pickup in EM and global growth, they noted.

Additionally, they cut utilities to neutral from overweight, saying they dont find the valuations attractive anymore. Todays moves take J.P. Morgan outright long in cyclicals compared to defensives. MarketWatchs Wallace Witkowski also recently reported that utilities were bound for a rough second half of the year .