Cairo, Egypt. Sometimes referred to as the Gateway to the Middle East, this hustling and bustling city of close to 20 million people is constantly moving. Considering that all of Egypt has a population of about 75 million, you could say that Cairo plays the biggest part in Egypt's development; after all it's the largest city in all of Africa and in the Middle East. As such, two things are happening: They are building up and they are building out; mostly out though, and the urban sprawl is resulting in a lot more people coming to the area. You can see it driving around the outer parts of the city. Take a drive around Ring Road (if you dare) and you'll see what I am talking about; the desert is filling up fast.
But why invest in Egypt? And more importantly, isn't it tough to do? Great questions indeed Fools, and the answers are: (1) because it is growing at a torrent pace, and (2) no, it's not difficult to invest there. Even with the iShares MSCI Egypt Fund on the horizon, there are many other ways to benefit from international growth trends right here at home. Heck, I bet a lot of you are already invested in Egypt and don't even know it. Allow me to explain ...
It's more than just Coke
Coca-Cola (NYSE: KO ) has been running strong in the Middle East for some time now. Although the drink of choice in Egypt is hot tea (ironic, I know), nothing beats the Cairo heat like a cold Coke. In 2009, the company did about 15% total unit case volume in its Eurasia and Africa sector alone, and growth in this sector is clocking in at a five-year compound annual growth rate of 8%, higher than any other. And hey, if you're a tea drinker, well, you cannot turn a corner in the city without seeing a sign advertising Unilever's (NYSE: UL ) Lipton Tea.
Communication is crucial
Telecom is a huge and competitive market to say the least. Cell phones are becoming more and more prevalent everywhere, and Vodafone (NYSE: VOD ) is taking advantage of the trend. With 24.6 million customers and 5.1% year-over-year revenue growth, Vodafone certainly has a strong position in the Egyptian market, and considering the company's global reach, I look for this to continue. In fact, you can use your Vodafone cell phone to call and have McDonald's (NYSE: MCD ) , or Yum! Brands' (NYSE: YUM ) Pizza Hut or KFC delivered right to your front door. Fools, I can assure you this is all quite doable in Cairo, as I have done this exact thing many times before.
The O word
Oil is a volatile commodity for sure, and it is pretty hard to find any news these days sans the Gulf oil spill and BP (NYSE: BP ) . Further, it is anyone's guess as to what is going to become of the British exploration and production giant. Regardless, over the past 44 years, BP has been responsible for almost half of Egypt's oil production, and it is the single largest foreign investor in the country. Don't like BP? That's understandable. Apache (NYSE: APA ) is spending a good bit of time and money in the country these days as Egypt represents Apache's largest acreage position with more than 11 million gross acres. In 2009, the region was responsible for 30% of Apache's production revenue and 26% of its total production with 152,600 barrels of oil equivalent per day. With such a robust oil industry, I imagine the exploration and production companies will be walking like Egyptians for some time.
Like desert sand through the hour glass
Of course, none of this means diddly if you aren't finding value in what you are buying. Price matters, and it really matters when there is still some significant growth to be had. Truthfully, I think the real story is the action these companies are seeing in places like Egypt and where they are going to find it next. The world is getting smaller, folks (thank you, Internet). As such, we are witnessing a consolidation of epic proportions, and the companies we grew up with are creating value in new places. It would be wise, nay Foolish, to consider being there one way or another.