The 2 Other Global Megatrends You Must Own


That was Global Megatrend No. 1 as identified by Motley Fool Global Gains advisor Bill Mann -- and he suggested that you own it for good reason. Capital is flowing worldwide like never before, and the current credit crunch will be just a blip when one considers the emerging purchasing power of consumers in places such as China, India, and Brazil.

That's not to downplay the significance of current events, but rather to observe that the global influence of the U.S. economy is diminishing. Capitalize by picking up shares of strong global banking brands such as Morgan Stanley or emerging foreign names such as ICICI (NYSE: IBN  ) or Banco Bradesco (NYSE: BBD  ) . Though Morgan has had its share of problems of late (thanks to subprime exposure), recent earnings were better than expected, and the firm's international business saw revenue rise 15% to $4.5 billion.

And banks aren't the only companies benefiting from global megatrends.

Get in on the ground floor if you can
"Remove yourself from your own cocoon ... and think about what is happening in the growth economies around the globe."

That was Bill's advice on how to find superior foreign stock ideas, and it's sound. Our Global Gains team traveled to India, China, Mongolia, Macau, Brazil, Chile, and Argentina for research in 2007, and we emerged with ideas we never would have found otherwise. That's a function of meeting management and investors on the ground in these countries. Not only do they provide color to the numbers they report in SEC filings, they also occasionally give hot tips about the companies they admire (often little-known to U.S. investors) that operate in the same markets.

But individual American investors likely don't have time for the same travel schedule.

While that's unfortunate for a number of reasons (the Great Wall and Iguassu Falls are two of the world's must-see attractions), recent events here in the United States have made clear two more global megatrends.

And yes, you must own them.

Global Megatrend No. 2: $4 gas
If you weren't aware that gas prices have been rising, you have been living in a cocoon. A gallon of gasoline costs $0.63 more today than it did at this time last year -- with the national average being $3.60 per gallon, according to the Department of Energy.

The gas-price issue is among the top priorities for consumers, presidential candidates, and the media. And while everyone says they want lower gas prices, don't expect that to happen anytime in the near future.

There's simply too much global demand, too many pinch points along the way from ground to pump, and too much idiocy influencing energy policy around the world. Alternative energy research may offer some long-term relief, but demand for energy should be so huge by the time much of that comes online (places such as China and India aren't even close to being fully "developed") that prices won't come down in response.

So buy energy -- but buy it with the intent to hold for the next decade or more. Both big E&P companies such as BP (NYSE: BP  ) as well as service companies such as Lufkin Industries (Nasdaq: LUFK  ) and CARBO Ceramics (NYSE: CRR  ) offer good ways to get exposure to this area of the market.

Global Megatrend No. 3: $4 milk
The price of food has been rising right alongside the price of energy. That, in part, is thanks to a spike in corn prices caused by ethanol demand. That spike has caused an increasing number of farmers to start growing corn and stop growing other grains, which has resulted in widespread sticker shock. After all, when grain prices rise, so, too, do the prices of things made from grain (bread and cereal) and things that eat grain (meat and milk).

Add record global demand to this equation, and you have another global megatrend.

Giants Monsanto and Archer Daniels Midland have already been hugely successful in this brave new agricultural world, returning 74% and 36% annually over the past five years.

But these aren't the only stocks that stand to benefit. Terra Nitrogen (NYSE: TNH  ) has been a monster performer thanks to this trend, and New Oriental Energy & Chemical (Nasdaq: NOEC  ) is a small Chinese company worth watching as that country's demand for food grows. Our trip to Argentina also uncovered a small company whose investments in agricultural land in Argentina and Brazil should reap very real rewards very soon -- and it's one of the top picks we brought home from that trip.

Buy to own
Money, energy, and food: Those are three clear global megatrends you should make room for in your portfolio. It could be as easy as buying a big multinational name, or you may want to drill down and find a company in a specific country that's poised to profit.

For help with those specific stock decisions, join us at Global Gains. You can see all of our research and recommendations, including that top Argentine agricultural stock, free with a 30-day trial. There is no obligation to subscribe.

This article was first published Jan. 24, 2008. It has been updated.

Tim Hanson does not own shares of any company mentioned. The Fool's disclosure policy tries really hard ... really.

Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 632802, ~/Articles/ArticleHandler.aspx, 10/27/2016 11:01:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 hour ago Sponsored by:
DOW 18,169.68 -29.65 -0.16%
S&P 500 2,133.04 -6.39 -0.30%
NASD 5,215.97 -34.29 -0.65%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/27/2016 4:00 PM
BBD $10.16 Up +0.10 +0.99%
Banco Bradesco CAPS Rating: ***
BP $36.00 Up +0.15 +0.42%
BP CAPS Rating: ****
CRR $7.17 Down -2.61 -26.69%
CARBO Ceramics CAPS Rating: ***
IBN $8.42 Up +0.02 +0.24%
ICICI Bank CAPS Rating: ****
LUFK.DL $0.00 Down +0.00 +0.00%
Lufkin Industries,… CAPS Rating: ****
TNH $103.48 Down -1.08 -1.03%
Terra Nitrogen CAPS Rating: ****