By: Jim Royal
You're about to hear the greatest ways to profit from the trillions in wealth being created by the exploding middle class around the world. And what's more, other investors aren't aware of this massive opportunity.
It doesn't involve putting your hard-earned money on risky Chinese stocks or buying into some unproven technology. In fact, the three companies I'm about to highlight are based in the United States and have some of the most recognizable brands around. And for you dividend hounds, they pay rapidly escalating yields, too.
You know these companies and see their ads or use their products every day. But many investors are overlooking one thing that is turning these blue-chip companies into growth machines again.
That catalyst for growth: spending overseas.
Fortunately, the oversight by other investors allows you the opportunity to ride the economic growth that's sweeping through emerging markets -- but with the safety of an established and well-run American company.
The opportunity here is absolutely immense. We're talking about trillions of dollars in wealth being created by the world's fastest-growing economies. To give you some idea, though, let's run through the background.
Globalization has been a huge investing buzzword over the last 20 years. Countries such as Brazil, Russia, India, and China -- the so-called BRIC nations -- have been rapidly industrializing, growing incomes at levels that can only be dreamed about by developed economies like the U.S. That's creating trillions in new global wealth.
But that doesn't mean that American investors can't grab a piece of the action.
Take a look at the growth in gross domestic product (or GDP) of the two largest nations (by population) to get a sense of the rapid development that's ongoing. You're already familiar with the largest, China, at 1.3 billion citizens, which has become the "workshop to the world."
From 2001 to 2009, China's GDP soared at an average rate of 14.9% annually (as measured in its own currency). That's stunning growth any way you slice it. And it compares more favorably against America's anemic 4% growth over the same period. From 1970 through 2009, China's economy grew 146 times larger, while the U.S. grew just 13.5 times larger.
But you might be less familiar with the prospects for India, which is not far behind with 1.2 billion citizens, but is much less developed. The growth curve looks just as attractive, though:
From 2001 to 2008, India put up an astounding 13.5% growth rate (in its own currency). Since 1970, India's economy has grown nearly 140 times its original size, compared to just 13.5 times for the U.S.
Consider this for just a minute: 2.5 billion consumers -- eight times as many as the U.S. -- are only just recently getting access to the Western-style products that dominate American and European markets.
And then there's also further opportunity in Russia, Brazil, Indonesia, as well as the many nations of Africa. While their populations aren't as large, the growth rates are still very enviable.
Those levels of industrialization have spawned an upwardly mobile middle class that is growing at a tremendous clip.
And they want American-style goods and services.
The McKinsey Global Institute estimates the middle class in India at just 50 million people, but projects the number to bloom to 583 million by 2030. Meanwhile, China's middle class is estimated at about 560 million and is expected to climb to over one billion by 2025. That compares to about 200 million in the American middle class.
That's trillions in new revenue that is just waiting to be earned by well-positioned companies.
And you can get a piece of the pie, if you know where to park your cash. The three American companies that I'll reveal to you shortly have only just begun to dig into the opportunities.
Fortunately, they're already on the ground overseas and they're laying down their competitive advantage for the prospect of decades of growth.
They are using their years of product, marketing, and consumer expertise to move swiftly and efficiently into new markets, establishing billions in new revenue streams in the process.
You'll know this first company by the golden arches you see across the U.S.
Yes, it's McDonald's.
Investors often mistakenly assume McDonald's is an old economy relic, left behind in the slow-growth U.S. But they couldn't be more wrong. What many fail to realize is the expansive opportunities left for the company in emerging economies.
But it's not the only American restaurant cashing in on massive growth abroad. The same goes for Yum! Brands, the company behind such fast-food staples as Taco Bell, KFC, and Pizza Hut.
Let's hit on these companies' hidden opportunities in China to start. Food from these giants is still seen as something of an affordable luxury, an item of prestige in many places abroad. And remember, these countries have four or five times the population of the U.S. and are growing much more briskly.
You may think of KFC and its fried chicken as the quintessential American fare, but Yum! already generates 85% more revenue in China than it does in the U.S. In fact, the U.S. comprises less than 26% of all the company's sales, as Yum! expands aggressively around the globe.
The thing is, investors are underestimating the potential in Yum!.
KFC has become a runaway hit in China. Yum! was the first quick-serve chain to enter China, beating even powerhouse McDonald's. The company has just over 5,200 locations there currently, but estimates that it can open some 20,000 outlets over time.
That opportunity has CEO David Novak crowing, "I wouldn't trade our long-term position in China with any consumer company in the world."
But even that may understate what the company can achieve.
In the U.S., Yum! has a restaurant for every 19,500 people. At a prospective 20,000 outlets, China would have a location for every 65,000 citizens, suggesting that the business opportunity may be much, much greater than Yum! is currently willing to project. Maybe three times as great!
And then there's Russia and India, where Yum!'s restaurants are seeing double-digit growth but make up less than 1% of the company's sales. So there's a long runway in these developing nations, too.
And while Yum! may have beaten McDonald's to China, McDonald's has massive growth plans of its own in the Middle Kingdom. It's rolling out its store network faster than in any other country ever (with the exception of the U.S.)
McDonald's currently has more than 1,600 outlets in the nation now, and is shooting for 2,000 locations in 2013. But, again that number looks tiny compared to the U.S. figures, where there's a Mickey D's for every 22,000 consumers. At that rate, the company could put up some 60,000 locations just in China, nearly tripling its total size from today. That's huge!
And like Yum!, McDonald's is only just getting started in India, meaning there's plenty of opportunity left.
But that misses a central point about their businesses: McDonald's and Yum! are not just hamburgers and fried chicken. These companies are massive food distributors that can tailor their offerings to each market, so they can repeat the same formula for success they've used elsewhere in the world, creating food for the middle class.
For example, in India McDonald's has adopted an entirely beef-free menu and debuted the Maharaja Mac, which uses chicken instead. The company has also developed a wealth of non-meat options to meet the needs of the country's many vegetarians.
Despite such phenomenal growth opportunities ahead, solid earnings, and growing dividends, many investors still overlook McDonald's and Yum!
But profits at these companies will continue to explode over the coming decades, and there's still time for you to secure your piece.
But the most exciting part is Nike's plan to expand abroad. To reach its growth target the company will have to tap into burgeoning international markets like Brazil and China.
It has effectively used its marketing and consumer insights to gain the advantage over rivals. Nike is already the frontrunner in the Chinese sportswear market with a 19% share. But it does face tough peers in Adidas at 15% -- and targeting market leadership by 2015 -- and homegrown rivals such as Li Ning and Anta, at 11% and 9%, respectively.
While Nike currently leads, it expects plenty of growth in the future, too. Management estimates the Chinese middle class to more than quadruple in the next ten years. Already China is Nike's second-largest market after the U.S., and it's gaining quickly.
And Nike has another huge tailwind in China.
Chinese citizens prefer the prestige of a global brand like Nike over domestic rivals, much as they like the cachet of eating at McDonald's or KFC. Nike is a luxury brand for upwardly mobile Chinese, and that's helping Nike increase sales at around a 15% clip there over the last three years.
So far the company has really only penetrated Tier 1 cities -- the biggies -- and it has room for further growth in Tier 2 and 3 municipalities, where the domestic brands are stronger. But it's already established a strong foothold and will continue to expand deeper into China.
And China is just the largest of the huge opportunities.
Nike expects other developing markets such as Brazil, India, and Central and Eastern Europe to show double-digit sales increases until at least 2015, adding on another $3 billion to $3.5 billion in revenue.
Nike's also expanding further into retail, allowing the company to capture higher margins and to obtain faster feedback on the most popular and profitable apparel styles.
That's all part of the massive depth of Nike's bench of marketing and consumer expertise and why the business will be able to take advantage of the massive wave of globalization that's still under way.
As a special thank-you for reading this report, now we'd like to share with you 12 more companies that top equity analysts at The Motley Fool believe will crush the market in 2012. Click below to read more.
I hope you've enjoyed this special report as much as I've enjoyed preparing it for you.
My name is Matt Argersinger. I'm the executive publisher of Motley Fool Stock Advisor.
As you probably know, it's our passion at The Motley Fool to help investors like you build lasting wealth.
That's why I'd like to rush you a copy of "Stocks 2013: The Investor's Guide to the Year Ahead" -- the brand-new premium report containing 12 timely stock recommendations from top Motley Fool analysts -- completely FREE.
Motley Fool Co-founders David and Tom Gardner recently rounded up a team of our top equity analysts to identify those stocks that stand to profit most in the coming year...
After exhaustive research and number-crunching, they emerged with 12 companies that will position you for profits in 2013, including...
You'll discover these three stocks, plus nine more powerful profit opportunities, the instant you download your FREE copy of Stocks 2013: The Investor's Guide to the Year Ahead.
Don't forget -- this is the highly sought-after report that, year after year, has handed investors market-beating returns. Our top pick from last year has already shot up 48%, while the market rose just 19%.
And I'm confident several companies featured in this year's report could do the same -- or better.
So don't delay! Get your copy of "Stocks 2013" right now -- ABSOLUTELY FREE!
Now obviously, the high-quality nature of this research and stock advice isn't something I'd hand to just anyone. If it got into the hands of too many investors, the "going against the crowd" factor working in many of these companies' favor would be gone, and many of the trades might get away from us...
But in return for me sharing this brand-new report with you, I'd like to invite you to join me and Motley Fool Co-founders David and Tom Gardner at Motley Fool Stock Advisor.
Better yet, I'm going to let you in for a specially reduced rate for new members. An entire year of honest, straightforward advice and stock recommendations for more than 60% OFF!
Every month, you'll receive the Motley Fool Stock Advisor advisory letter in the mail. You'll even be alerted by email the moment it's available online, so you can access it instantly.
Each Motley Fool Stock Advisor issue reveals not one but TWO top stocks handpicked and thoroughly researched by David and Tom Gardner -- that are poised to CRUSH the S&P 500 over the next three to five years.
You'll also get the full rationale behind every recommendation, including potential risks, so you'll have everything you'll need to make your own sound investment decisions.
Plus, when you accept this invitation for first-time subscribers today, you'll also receive these features, benefits, and bonuses:
Live Interactive Stock Scorecard -- Our scorecard lets you keep track of how we're doing relative to the S&P 500 and how David and Tom are doing against each other. You'll receive a scorecard in each printed issue. And the scorecard is online as well, where it's updated throughout the trading day. You can click through to get more information on all our picks, including back issues, discussion boards, and much more.
Weekly Updates -- We'll send you updates every week so you get all the important information you need to know about right away -- from buying and selling a stock to our analysis of a specific development. You'll also have access to all previous updates on our members-only website.
All Back Issues -- Every back issue of our newsletter is archived on the site, so you can read every recommendation we've ever published.
Discussion Boards -- Where else can you learn about a company directly from the candid experiences of the company's employees, customers, and investors? I don't know of any other newsletter or investment advisor or brokerage house that would welcome this type of frank exchange between its customers. But it's all part of the philosophy here at The Motley Fool.
I've been told by some members that Motley Fool Stock Advisor is like an investment university. It's certainly an active community of smart investors. You can join David and Tom Gardner -- along with your fellow members -- online in spirited discussions. Or you can sit back and simply follow the wealth-building recommendations...
Some advisory services charge hundreds of dollars for access to their "premium" services. But access to our world-class, members-only website... and all its powerful moneymaking resources... is yours today at a DEEP DISCOUNT...
When you join today, an entire year of Motley Fool Stock Advisor only costs you $79. That's a savings of more than 60%.
PLUS, "Stocks 2013," a $99 value, is also yours FREE the instant you sign up!
And if saving $100 off the regular membership rate and receiving our $99 "Stocks 2013: The Investor's Guide to the Year Ahead" report FREE is something you like -- HERE'S AN EVEN BETTER DEAL!
If you join me right now through this special offer -- because it's only available for a limited time to new members -- I'll send you a bundle of timely investment reports, valued at more than $100, also free! Grab your FREE bundle of exclusive Motley Fool Stock Advisor investment reports (valued at more than $100) today!
"6 Danger Signs in 5 Minutes" -- (a $29 value -- YOURS FREE!)
These quick and easy checks will help you sniff out "creative accounting," fictitious revenue, and other ways companies can seek to deceive their stockholders. These shortcuts will help you cut through balance-sheet chicanery like a laser.
"How to Know When to Sell" -- (a $29 value -- YOURS FREE!)
David and Tom don't believe in selling before a company's fundamentals change dramatically (or you find an even better company). But it is necessary now and then. In this special report, "How to Know When to Sell," they reveal their simple, easy methods for quickly assessing your stocks, based on fundamentals.
"Investing the Stock Advisor Way" -- (a $29 value -- YOURS FREE!)
What's the secret formula behind Stock Advisor's success? David and Tom Gardner reveal all in "Investing the Stock Advisor Way." Discover the strategies The Motley Fool co-founders use to pick so many triple-digit winners and help their readers beat the market by 57 percentage points. Inside this special report you'll learn the full details of their seven key investment principles, plus the individual stock-picking rules they follow to uncover their biggest wins. If you're serious about your investments (and who isn't these days?), this is one report you won't want to miss.
These three reports, along with "Stocks 2013: The Investor's Guide to the Year Ahead," are yours free the instant you join me! PLUS, here's why you can join me at Motley Fool Stock Advisor today with complete confidence:
Your Special "Keep Everything" and "Lose Nothing" DOUBLE GUARANTEE
Because we stand behind every piece of advice, insight, and recommendation, I'd like to offer you the opportunity to position yourself to make a pile of money with all the recommendations that Motley Fool Stock Advisor has to offer -- WITHOUT ANY RISK WHATSOEVER. Here's how it'll work...
You can tell me to send your money back, up to the last day of your first month. And I'll give you a COMPLETE REFUND -- NO QUESTIONS ASKED.
The new special report, "Stocks 2013: The Investor's Guide to the Year Ahead"... The bundle of three exclusive investment reports... plus all the content you can access on the Motley Fool Stock Advisor members-only website: all the reports... all the recommendations from past issues... all the articles full of proven investment lessons -- ALL YOURS TO KEEP, WITH MY COMPLIMENTS. That's four reports, valued at more than $199 -- FREE!
Of course, this kind of guarantee makes it possible to snap up everything we have to offer and pay nothing. But that's OK. That's how confident I am in what we have to offer you. So let's get started...
But please remember, this is a limited-time offer. I can only guarantee you a FREE copy of these reports and "Stocks 2013: The Investor's Guide to the Year Ahead," which includes 12 companies set to soar in 2013, plus your 60% discount to Motley Fool Stock Advisor -- if you join me right now AND if you join through this special invitation.
I urge you to start now, because there will never be a better or easier time to position yourself for explosive profits in the coming year... and from a trusted source -- Motley Fool Stock Advisor!
All official newsletter returns as of January 18, 2013. All other numbers as of January 28, 2013 The Motley Fool owns shares of McDonalds and Nike.