Three Stocks Set to Gain Big from Emerging Market Growth

This certainly is not a market for squeamish investors. The Dow's roughly 25% rise to 12,250 since September, along with surging oil and gasoline prices, have some analysts forecasting that U.S. GDP growth will slow in the quarters ahead, triggering a substantial reversal in the stock market.

With a slowdown in U.S. economy a fair possibility, it's prudent to consider -- if you can tolerate the risk -- global growth stock plays that won't suffer as much if commercial activity in this country slows down. Here are three:

Chicago Bridge & Iron: Taking Care of Business

The stock of Chicago Bridge & Iron (CBI) just keeps rolling along: It has been in an uptrend for about a year, with shares more than doubling in value to about $40, and its future looks just as promising. Chicago Bridge & Iron specializes in projects that produce, process, store and distribute the world's natural resources -- services that are in-demand in emerging markets such as China, Russia, South America, and the Middle East.

In 2011, CBI's revenue should increase by more than 15%, led by profits from its liquid natural gas projects. There are also positive outlooks from its Canadian oil sands projects, and its shale and unconventional gas projects. Reuters expects CBI to earn $2.38 and $2.73 per share in 2011 and 2012, respectively. Based on those figures, a $50-plus price for CBI by the end of 2011 would not be unreasonable.

Cummins: The Right Products at the Right Time

To quote the late "first lady of Broadway," Ethel Merman, "everything's coming up roses" for truck engine and power generation system manufacturer Cummins Inc. (CMI).

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Cummins' stock price surged higher in 2010, slicing through major psychological resistance at $100 in December, and raced to $115, before a recent healthy correction created a decent entry point near $107.

With more than 50% of its revenue from international sources, Cummins is well-positioned to capitalize on continued global economic growth, and sales of its efficient truck engines and infrastructure-based power generation equipment are expected to keep increasing. Cummins is forecast to post strong engine sales growth in India, China and Brazil in 2011, and when you have a product that's in demand in those rapidly growing economies, you're the business world's equivalent of a Broadway smash hit.

Reuters expects CMI to earn $7.21 and $8.68 per share in 2011 and 2012, respectively. Hence CMI should trade above $140 by mid-2012.

Stanley Works: Still Doing Things Right

Old reliable hardware and tool company Stanley Works (SWK) has registered an impressive roughly 50% stock price increase in the last nine months, putting the psychological resistance levels of both $60 and $70 per share in the rear-view mirror. Currently, it's trading near $74, and it should record additional impressive gains during the rest of 2011.

About 40% of Stanley's revenue is international, and it has a strong presence in key, fast-growing emerging markets. Further, three of its important business units -- hand tools, power tools, and accessories -- should perform well as the global economic expansion continues.

Rare is the day you will find a steadier performer than New Britain, Conn.-based Stanley Works. The tool and hardware manufacturer is sort of a microcosm of the industrial ascension of the United States. Stanley is a low-profile, highly productive manufacturer of hammers, screwdrivers, saws, pliers, wood planes, measuring tapes, etc. The craftsmanship and durability of its products is renowned. Reuters expects Stanley to earn $4.93 and $6.03 per share in 2011 and 2012, respectively, which should propel the shares above $85 by mid-2012.

No Guaranteed Upside with Stocks

Keep in mind that all of the above stocks contain moderate risk, and are not suitable for low-risk investors.

Safest Pick: Stanley Works (SWK).

Best Pick: (higher risk)Chicago Bridge & Iron (CBI).

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

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