10 Stocks To Make A Fortune On The Emerging Market Consumer

shopping, Tokyo, Asian girls

Photo: Flickr / Allen Ang

Bank of America Merrill Lynch’s global equity strategy team think the best way to play growth in emerging markets is to invest in developed market stocks with high percentages of international sales.Emerging markets (EM) consumers have higher rates of savings growth and consumption growth than their developed markets (DM) counterparts, making the EM consumer a compelling investment thesis.

DM stocks are a good way to play the EM consumer story, according to BAML, because they are much more liquid in trading and the companies have better diversified sales portfolios with exposure to multiple markets.

Here’s how the screen works: it only looks at the Consumer Discretionary and Consumer Staples sectors, and it only screens for stocks with greater than $10bn in market cap and at least 30% of 2011 sales generated from emerging markets.

The team found 29 stocks, 10 of which are based in the U.S.

#1: Wynn Resorts (WYNN)

Industry: Hotels, Restaurants & Leisure

% of sales from EM: 72%

12-month forward P/E: 15.9

Description: Wynn Resorts develops and operates luxury casinos and hotels in the U.S. and Macau.

Source: Bank of America Merrill Lynch

#2: Mead Johnson (MJN)

Industry: Food Products

% of sales from EM: 65%

12-month forward P/E: 24.5

Description: Mead Johnson is a global supplier of baby food products.

Source: Bank of America Merrill Lynch

#3: Philip Morris (PM)

Industry: Tobacco

% of sales from EM: 61%

12-month forward P/E: 15.3

Description: Philip Morris is one of the largest cigarette manufacturers in the world.

Source: Bank of America Merrill Lynch

#4: Colgate-Palmolive (CL)

Industry: Household Products

% of sales from EM: 52%

12-month forward P/E: 17.6

Description: Colgate-Palmolive manufactures household and hygiene products like toothpaste and detergents.

Source: Bank of America Merrill Lynch

#5: Las Vegas Sands (LVS)

Industry: Hotels, Restaurants & Leisure

% of sales from EM: 51%

12-month forward P/E: 16.7

Description: Las Vegas Sands develops and operates luxury casinos and hotels in the U.S., Macau, and Singapore.

Source: Bank of America Merrill Lynch

#6: Yum! Brands (YUM)

Industry: Hotels, Restaurants & Leisure

% of sales from EM: 50%

12-month forward P/E: 19.6

Description: Yum! Brands operates the ubiquitous global KFC, Taco Bell, and Pizza Hut fast food chains.

Source: Bank of America Merrill Lynch

#7: Kimberly-Clark (KMB)

Industry: Household Products

% of sales from EM: 36%

12-month forward P/E: 14.8

Description: Kimberly-Clark is a producer of paper-based consumer goods and is best known for the Kleenex brand.

Source: Bank of America Merrill Lynch

#8: Procter & Gamble (PG)

Industry: Household Products

% of sales from EM: 35%

12-month forward P/E: 15.2

Description: Procter & Gamble manufactures a massive portfolio of consumer goods including popular brands Febreze, Tide, Folgers, Gillette, Dawn, and Vicks, among others.

Source: Bank of America Merrill Lynch

#9: Coca-Cola (KO)

Industry: Beverages

% of sales from EM: 32%

12-month forward P/E: 17.5

Description: Coca-Cola is a leading manufacturer of soft drinks globally.

Source: Bank of America Merrill Lynch

#10: PepsiCo (PEP)

Industry: Beverages

% of sales from EM: 31%

12-month forward P/E: 16.0

Description: PepsiCo is Coca-Cola's chief competitor and another leading manufacturer of soft drinks worldwide.

Source: Bank of America Merrill Lynch

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