Note from Louis Basenese: If the thought of investing in overseas markets gives you cause for concern, I’d like to share an article with you today from our colleagues at The Growth Stock Wire that should alleviate some of your unease.
In it, you’ll find a simple, practical way to diversify abroad, while still maintaining a strong element of safety from these lesser-known markets. Take a look below…
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By now, the idea of investing in fast-growing emerging markets like China and India is old news.
But what most folks don’t know is there are two different ways to play such growth – one for traders and one for investors.
For example, making money from cyclical “boom and bust” trading ideas like biotechnology, gold stocks, Chinese growth stocks and commodities takes precise contrarian timing and a willingness to use intelligent exit strategies.
But for investors you need to focus on “basic,” lower-risk 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…
Three American Stalwarts Tapping the Overseas Profit Trend
Let’s take UPS (NYSE: UPS), for example – a company that has delivered America’s packages for over a century.
Compared to the same three-month period last year, UPS just saw its domestic package volume grow by a pathetic 0.1%. But that’s no reason to discount the firm’s future success. You see, while its domestic business sputtered, the company’s international business saw volumes grow more than 6%.
Or consider Visa (NYSE: V). It makes billions of dollars by taking a fraction of a penny from each dollar that changes hands via its payment network.
The company released its results last week, which showed its U.S. business humming along. Total payment volumes rose by 10% over the last year. But that’s nothing compared to the company’s international business, where volumes jumped by more than 26% over the past year. In short, Visa’s international business is growing more than 2.5 times faster than its U.S operations.
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A final example is evident in the latest numbers from casino giant, Las Vegas Sands (NYSE: LVS), which show that the future of gambling lies outside the United States, as well. (My colleague, Frank Curzio, alerted Growth Stock Wire readers to this trend on our trip to Asia 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. And the opening of its latest casino – Marina Bay in Singapore – helped Las Vegas Sands post an 87% growth rate outside the United States.
While 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.
Global Growth Begins at Home
For investors, these numbers confirm that there’s a big bull market happening outside the United States. And you can profit from it by investing in big, well-regulated U.S. companies.
Both Visa and Las Vegas Sands give investors an idea of how to profit, despite America’s relative decline. In both cases, their U.S. businesses aren’t actually shrinking… they’re just inching along relative to the international boom. And they’re benefiting from people outside the United States 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 current earnings season, places like Asia are experiencing much higher growth. So much so 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 markets with the safety of U.S. regulations.