Monday, August 1, 2011
By now, the idea of owing fast-growing emerging markets like China and India is old news. You've no doubt heard you need to invest in these places for "growth."
But what most folks don't know is there are two different ways to "play it"... one for traders and one for investors.
We regularly talk about cyclical "boom and bust" trading ideas in these pages... biotechs, gold stocks, Chinese growth stocks, and commodity sectors. Making money here takes precise contrarian timing and a willingness to use intelligent exit strategies.
But for investors, you need to focus on lower-risk, "basic" ways to invest in emerging markets... You need safe, U.S.-based companies that sell to the world.
This earnings season has brought some incredible stories on this idea.
For example, UPS has been delivering America's packages for over a century. But compared to the same three-month period last year, UPS saw its domestic package volumes grow by a pathetic 0.1%. The thing is, that's no reason to discount UPS's future success. You see, while its domestic business sputtered, the company's international business saw volumes grow more than 6%.
Or consider Visa. Visa makes billions of dollars by taking just a fraction of a penny of each dollar that changes hands via its payment network. Visa released its latest results last week...
Compared to UPS, Visa's U.S. business is humming along, with total payment volumes rising 10% over the last year. But that's nothing compared to the company's international business, where volumes rose more than 26% over the past year. In short, Visa is growing more than 2.5 times as fast outside the U.S.
For another example, the latest numbers from casino giant Las Vegas Sands show the future of gambling lies outside the U.S. as well. (My colleague Frank Curzio gave Growth Stock Wire readers a heads-up on this trend during our trip to China last year.)
During the recent quarter, only 14% of the company's revenue came from its Las Vegas operations. Meanwhile, more than 80% came from Macau and Singapore. Thanks to the opening of its latest casino – Marina Bay in Singapore – Las Vegas Sands posted an 87% growth rate outside the U.S.
Las Vegas Sands' results also show that it's not just a matter of higher growth outside the U.S. The company makes an average daily rate of $200 on its hotel rooms in Las Vegas. That's lower than all its properties in Macau and Singapore. At the Four Seasons Hotel Macao, the average guest paid $323 per night during the most recent quarter.
For investors, these numbers confirm there's a big bull market happening outside the U.S. And you can profit from this trend by investing in big, well-regulated companies based in the U.S.
Both Visa and Las Vegas Sands offer investors a strong example of how to profit in spite of America's relative decline. In both cases, their U.S.-based business isn't actually shrinking... It's just inching along relative to the international boom. And both companies are benefitting from people outside the U.S. having a lot more money to spend.
I'm not in the "America is going to hell in a handbasket" camp. I think America will continue to present great investment opportunities over the coming years. But as you can see from the latest earnings season, places like Asia are experiencing much higher growth... so much that U.S. companies have become emerging market companies in disguise.
If you're looking to make long-term investments in emerging market growth, look into companies like these. You get the profit potential of emerging market growth with the safety of U.S. regulations.
For more examples of businesses thriving despite a poor economic climate, check out Dan Ferris' World Dominating Dividend Growers… He's told DailyWealth readers to get in on cigarette giant Altria, consumer goods giant Procter & Gamble, and software giant Microsoft.
These companies are the best in their fields. They pay out ever-increasing income streams, and they are not affected by economic downturns. There is no safer place to grow your income year after year.