Emerging markets guru Mark Mobius dismisses the idea that foreign stocks are overpriced and maintains a bullish stance on commodities, particularly food prices.

Mobius is executive chairman of Templeton Asset Management, based in Singapore. He directs the Templeton research team based in 15 global emerging markets offices and manages emerging markets portfolios.

Writing on his Franklin Templeton Investments blog, Mobius recounted a recent conference call with investors. Among other topics, he says, investors asked if emerging markets were getting too pricey.

“In general, according to the International Monetary Fund, emerging markets are expected to grow an average of three times faster than developed markets in 2011. At these growth rates, I believe the opportunities could be outstanding,” Mobius writes.

“While valuations don’t appear to be as cheap as they were, they are still not as expensive as they were at the very height of bull markets we’ve seen in the past, such as prior to the Asian crisis in 1997,” he points out.

In fact, Mobius says, foreign stocks are “in the middle of their historical range” by his analysis, even if some have “run ahead of fundamentals.”

It’s still a good time to buy stocks in emerging market countries while remembering that a blanket foreign buy might not yield the same results as careful stock-picking based on research, Mobius says.

“If you look purely at the indices, Thailand’s equity market returned about 56 percent, while Brazil returned 7 percent in 2010,” Mobius writes.

“This is why I think our stock-picking approach is so important. In times like this, we have to differentiate between stocks that are expensive and those that are not; that takes a great deal of work.”

As for inflation, Mobius believes that weather has helped push up food prices but that growing demand in emerging markets ultimately will create value for commodities investors.

“From a longer-term perspective, increasing demand for food, particularly from India and China, means we may have to live with higher food prices unless farm productivity increases dramatically,” Mobius writes. Ukraine and Brazil are two countries the funds are investigating closely for investments in food growing and processing, he says.

Rising inflation is forcing U.S. food producers to choose, increasingly, between their profit margins and scaring away recession-weary U.S. consumers.

"The big challenge will be, how much can we swallow and how much can we pass along?" Jack Brown, chief executive of Stater Bros. Markets, a 167-store grocery chain in southern California told The Wall Street Journal.