GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

These Companies Can Help Investors Profit From the Emerging Markets

August 24, 2014 | About:
rsconsultant

rsconsultant

0 followers

Goldman Sachs Group CEO Lloyd Blankfein expects developing markets to continue extending. While that development will accompany instability, it remains an investment opportunity. Fearless types should consider companies like Avon (AVP) and General Electric (GE) to exploit these opportunities.

While discussing the world's financial and investment scenery with a business assemble in Sydney, Blankfein was as of late cited by Bloomberg as saying, "It is, extremely plausible and sure that [brazil, Russia, India and China] will keep developing." He included that they would "give the world much of its development."

Be that as it may, he also said that this development will be unpredictable. For instance, he noted that China is in the midst of a shift from development at any cost to a more controlled and sustainable level of development. So investors should be prepared for something of an unpleasant ride.

Selling Direct

Tupperware (TUP) is improving much than Avon generally. The immediate seller of plasticware, kitchenware, and excellence supplies projects that Asia will see the white collar class develop from 500 million to 1.7 billion by 2020, fueling a significant part of the world's working class development. South America will contribute, as well, yet to a lesser degree.

Around 60% of Tupperware's top line comes from developing markets. Sales were level somewhere around 2011 and 2012, however that was generally the result of a frail second from last quarter last year, and late results suggest that was an one-quarter fluke. Development and income investors should consider the organization, since its shares are exchanging around record-breaking highs and it has a yield of around 2.9%.

Nonetheless, Avon may offer all the more value for your money. The cosmetics organization's top line has been on a harsh upward politeness over the past decade, however its profit margin has shrunk from the mid-teens to the single digits. That is directed to an administration shakeup and a redo of the organization, including the sale of its jewelery business.

Albeit late red ink is unpleasant, Avon knows it has problems and is making moves to settle them. While the shares have moved higher of late, they stay fortunate of their highs. Investors have low, however enhancing, expectations of the organization. Latin America represents almost half of the business today, with Asia comprising an alternate 10% or thereabouts. That gives Avon more room to develop in Asia than Tupperware.

With low expectations and a turnaround under way, more aggressive investors should consider Avon for developing business exposure. More conservative investors, however, should stick to Tupperware.

Industrial Giants

Developing markets make up about 50% of ABB's (ABB) business and around 35% of Ge's. That makes ABB a more straightforward play on the space. The organization makes everything from circuit breakers to robots, and has a focus on force. That is a territory that will be increasingly critical later on.

ABB's shares sold off after it released second quarter earnings. Despite the fact that for the most part strong, the organization's European business has been dragging down results. What's more a soon to be installed CEO will need to handle the reconciliation of remarkable acquisitions like Baldor Electric, Thomas & Betts, and Power-One. That is a great deal to manage.

That said, the shares yield around 3.2% and the dividend has been increased normally since it was launched in 2006. Weakness here could be a purchasing open door for development and income investors ready to screen the coordination of acquisitions and the European business' turnaround efforts under another CEO.

General Electric, then again, has as of now been through the valley of death and is recuperating. Surely, the worldwide industrial monster's monetary arm brought it low amid the 2007 to 2009 recession. That is directed to a refocusing of the organization around its industrial center. Despite the fact that it has less exposure to developing markets than ABB, it is still an enormous player.

The organization's second quarter earnings from proceeding with operations beat analyst expectations by a penny, heading the shares to development prominently. All the more significantly, on the other hand, GE reaffirmed its desire for margin expansion to proceed in the industrial business. GE's business is plainly progressing.

Its shares yield around 3.1% and the dividend has been increased customarily since being cut amid the recession. Also despite a steady development since the recession finished, the shares stay fortunate of their prerecession highs. So there's still upside potential.

At the end of the day, GE is a greater and more proficient organization than ABB. While ABB is a decent organization with solid long haul prospects and a greater developing business sector foot shaped impression, GE looks like it offers all the more close term upside at this time because of more positive investor sentiment.

Developing Options

Developing markets are situated to power the world's development. It will be an uneven ride. Tupperware and Avon are two heading retailers in the space, however Avon presumably offers more turnaround potential right now. Keeping in mind ABB is a decent organization and a more straightforward play on the industrialization of developing markets, GE's retouching business is driving its stock value higher at this moment.


Rating: 1.0/5 (1 vote)

Voters:

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK