5 Consumer Goods Stocks With Major Exposure to Asia
The world economy is on two different tracks.
On one track, much of the developed world is experiencing economic contraction and stagnant growth. Countries throughout Europe have stumbled into recession because of austerity measures. Japan persists on its decade-long path of lackluster growth. And the U.S. economy, while rebounding, continues to underperform its potential, recording growth of only 2.2% in the first quarter of 2012.
On the other track, the developing world is recording robust economic growth. Spurred by the twin tailwinds of easy external financing and a dramatic uptick in commodity prices, output from Latin America grew by 6.5% in 2010 and 4.5% last year. And the emerging markets in Asia continue their dramatic upward ascent, led by China and India, which are expected to record growth rates this year of 8.2% and 6.9%, respectively. While China's growth rate is slower than its recent doubt-digit trajectory, it still remains impressive.
The corporate poster child of this two-track system is Yum! Brands, the U.S.-based proprietor of Pizza Hut, Taco Bell, and KFC. In 2011, the company's same-store sales declined by 1% in the United States but grew by 19% in China. More than 70% of its operating profit is now generated abroad. And its shares have outperformed those of its principal competitor, McDonald's, which derives a full 40% of its revenues from Europe, by a staggering 28 percentage points over the past five years.
With this in mind, I've created two different series of articles. The first identified stocks with significant exposure to Europe's ailing economy. In this regard, I looked at popular stocks, Dow stocks, tech stocks, consumer goods stocks, and pharmaceutical stocks. The second, and current, series discloses stocks with major exposure to the fast growth of Asia. So far, I've looked at popular stocks and Dow stocks. And below, is a list of consumer goods stocks with major exposure to Asia.
(% of net sales)
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|Kimberly-Clark (NYS: KMB)||36%||$31||Add|
|Kraft (NYS: KFT)||29%||$68||Add|
|Procter & Gamble (NYS: PG)||16%||$176||Add|
|Coca-Cola (NYS: KO)||15%||$171||Add|
|PepsiCo (NYS: PEP)||11%||$108||Add|
Source: All geographic sales figures other than Coca-Cola's are from the respective companies' most recent annual reports. Coca-Cola's are from its most recent quarterly report. Market cap data is from Yahoo! Finance. Kimberly-Clark groups together sales from Latin America and Asia. Kraft includes Asian sales under the "developing markets" subheading.
At the end of the day, it should be no surprise that companies such as Coca-Cola and PepsiCo have made their way onto this list. Coke is reputed to be the world's most valuable and well-known brands, and Pepsi products are available in even the most remote regions of the world.
In addition, P&G, Kimberly-Clark, and Kraft each have impressive portfolios of powerful brands. As I discussed recently, P&G alone controls 26 brands, which generate more than $1 billion in annual sales each. This is one of the reasons that I've recommended it as a great stock for new investors.
The net effect of this for investors is played out in each of the companies' projected earnings-per-share growth over the next five years. Kimberly-Clark, Coca-Cola, and Procter & Gamble are all slated to record increases of 7% to 8%. PepsiCo is expected to increase its EPS by a little more than 6%. And Kraft comes in at the high end with a five-year expected EPS growth of 9%.
Foolish bottom line
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At the time this article was published Fool contributor John Maxfield does not have a financial position in any of the companies mentioned above. The Motley Fool owns shares of PepsiCo and Coca-Cola. Motley Fool newsletter services have recommended buying shares of Procter & Gamble, Kimberly-Clark, Yum! Brands, Coca-Cola, McDonald's, and PepsiCo. Motley Fool newsletter services have recommended creating a diagonal call position in PepsiCo. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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