Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Canadian Cannabis Stocks CRASH as Canopy Growth Hits a Dead End - 14th Dec 19
Retail Sector Isn’t Dead, and These 6% Dividend Paying Stocks Prove It - 14th Dec 19
Top 5 Ways to Add Value to Your Home - 14th Dec 19
Beware Gold Stocks Downside - 13th Dec 19
Fed Says No Interest Rate Hikes In 2020. What About Gold? - 13th Dec 19
The ABC’s of Fiat Money - 13th Dec 19
Why Jo Swinson and the Lib Dems LOST Seats General Election 2019 - Sheffiled Hallam Result - 13th Dec 19
UK General Election 2019 BBC Exit Poll Forecast Accuracy Analysis - 12th Dec 19
Technical Analysis Update: Tadawul All Share Index (TASI) - Saudi Arabia ETF (KSA) - 12th Dec 19
Silver Miners Pinpoint the Precious Metals’ Outlook - 12th Dec 19
How Google Has Become the Worlds Biggest Travel Company - 12th Dec 19
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Corporate Earnings Prove "Glocal" Companies are the Best Investments

Companies / Corporate Earnings Jul 27, 2011 - 07:39 AM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleKerri Shannon writes: The second-quarter earnings season has delivered some healthy activity, but the true standouts are the big U.S. companies that have learned to profit from emerging markets.

These are what Money Morning Chief Investment Strategist Keith Fitz-Gerald refers to as "glocal" companies - firms that have a global and local presence. And they offer investors a way to profit from emerging-market growth, while also safeguarding against turbulence at home.

Indeed, as U.S. debt issues continue to weaken the U.S. dollar, "glocal" companies are profiting from increased exports, selling to markets like China and India and their growing middle class.

So, let's look at some of the most promising prospects.

Earnings Season Shows Boost in Profit from Emerging Markets
So far this season, earnings at companies in the Standard & Poor's 500 Index are the highest they've been in four years, according to S&P analyst Howard Silverblatt. About 75% of companies that have reported have exceeded analysts' expectations, and many raised earnings' forecasts for the rest of the year.

Earnings per share are up 19% from a year earlier for the 122 S&P companies that reported earnings as of July 22. And much of the increase is from companies with strong exposure to emerging markets.

McDonald's Corp. (NYSE: MCD), which gets about two-thirds of its revenue from overseas sales, reported that second-quarter earnings increased 15% to $1.4 billion. The company said overseas sales growth outperformed U.S. growth in the April-June quarter.

General Electric Co.'s (NYSE: GE) second-quarter revenue jumped 21% to $3.8 billion, with a big boost from its operations in emerging markets. GE saw U.S. revenue from its core industrial businesses decrease by about 3.4%, while international industrial revenue climbed by 23%, accounting for about 59% of GE's total industrial revenue.

GE's Chief Financial Officer Keith Sherin said the company saw slow growth in the United States, but its international divisions enjoyed double-digit revenue growth last quarter, including a 91% jump in India and a 35% increase in China.

The growth helped GE get a record order backlog of $189 billion.

Air Products & Chemicals Inc. (NYSE: APD) expects to split profits this year between the Americas and Asia, but Chief Executive Officer Paul Huck said that split is starting to shift.

"We think that that number starts to tilt more toward Asia going forward," Huck told investors on a conference call last Friday.

Honeywell International Inc. (NYSE: HON) Chief Financial Officer David Anderson said high U.S. unemployment and sovereign debt concerns across the globe have made companies reevaluate their operations to profit from emerging markets.

Anderson said U.S. and European economic problems have led to a "muted or grinding subpar recovery."

"As a result, there is a need for both caution and flexibility in terms of your operating mind-set," he said.

Foreign demand - especially from China - also helped boost Caterpillar Inc.'s (NYSE: CAT) second-quarter profit by 44%. About 90% of Caterpillar's U.S.-made large mining trucks are exported. Sales were up 34% in Latin America and 41% in the Asian-Pacific region.

Getting in on Glocal Companies
One of the major offshoots of this global growth has been increased hiring abroad.

Indeed, many global companies are moving more and more of their operations overseas, focusing their hiring efforts on markets that have performed better than the United States. With a weak U.S. dollar, foreign sales are likely to continue outperforming those at home, meaning jobs are unlikely to return quickly.

"Any U.S. multinational corporation is going to benefit from a weaker dollar," Michael Yoshikami, chief executive at fund management firm YCMNET Advisors, told Reuters earlier this year. "The problem is that on a fundamental basis, there isn't a real driver for massive re-employment."

According to the U.S. Commerce Department, U.S. multinational corporations cut their domestic workforces by 2.9 million during the 2000s, and increased overseas workforces by 2.4 million.

Now that companies have increased efficiency in the United States, they've enjoyed better earnings and have little incentive to hire at home.

"We've driven all this cost out. Sales have come back, but people have not," said Greg Hayes, chief financial officer at United Technologies Corp. (NYSE: UTX). "It's the structural cost reductions that we have done over the past few years that have allowed us to see strong bottom-line results."

While many Americans criticize companies that take U.S. jobs overseas, you as investors can profit from the global shift.

"It doesn't take more than a quick glance to see that the capital flowing out of the United States and into other countries has been very beneficial for a lot of corporations," said Money Morning Contributing Editor Shah Gilani. "Those are the corporations whose shares you should be buying."

In addition to the U.S. multinationals listed above, another U.S.-based company expected to profit from increased overseas sales is Wal-Mart Stores Inc. (NYSE: WMT). Wal-Mart has successfully introduced its "everyday low prices" strategy to markets in Japan and Mexico, and is now moving on to markets like Brazil and Honduras.

The company credits the low-price approach to increasing international growth by 11.5% in the first quarter.

"The emergence of the middle class in countries like Brazil and China are such powerful drivers for Wal-Mart," Sarah Henry of Manulife Asset Management, which owns Wal-Mart shares among its $217 billion in assets under management, told MarketWatch.

Wal-Mart recently got approval to merge with South African retailer Massmart.

"We'll grow much more," Wal-Mart Chief Executive Mike Duke told MarketWatch. "There are many more growth opportunities in each country. South Africa is a great example. That can be the beginning of something great."

Money Morning's Keith Fitz-Gerald said exposure to Wal-Mart is good long-term because of the company's diversified revenue stream and multiple-product lines.

Wal-Mart will report second-quarter earnings in August.

Fitz-Gerald also alerted readers to another stock pick profiting from international cash flows, even as U.S. markets stagnate. To find out one of the best ways to profit from emerging markets, you can sign up for our affiliate newsletter, the Money Map Report.

Source :

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules