Three bets on global growth – MoneyWeek

Andwhilewearenotinthedouble-dipcamp,wedoexpectrevenuegrowthtobecomeprogressivelymoredifficult。

Onthatbasis,weretainapreferenceforgrowthstocksovercyclicals,andglobaloremerging-marketexposureoverdomesticexposure。

Onebyproductofatougherrevenueenvironmentisthatfirmshavetospendmoretogrow。

ButthisismusictotheearsofWPP(LSE:WPP):astheworldslargestmarketingcompanyitsperfectlyplacedtobenefit。

Blue-chipfirmssuchasProcterGamble,UnileverandReckittBenckiserareallaggressivelyincreasingtheirpromotionalspending。

Indevelopedmarketsthesefirmsneedtospendmoretoretaintheircustomers,andinemergingmarketstheyneedtospendmoretowinthem。

Whetheritistelevisionadvertising,alargeronlinepresence,orbettermarketresearchaboutcustomers,WPPisafirmthatcandeliver。

LeadbySirMartinSorrell,WPPwasquicktoidentifythepotentialinemergingmarkets,whichnowaccountfor28%ofearnings。

ThatincludesmarketleadingpositionsinBrazil,Russia,IndiaandChina。

Intherecentmarketrally,reliablegrowthstockshavebeensomewhatoverlookedinfavourofcyclicals。

AstraZeneca(LSE:AZN)hasbeenonesuchstock,andthustradesonaveryundemandingvaluation。

Investorconcernshavefocusedonanumberofitskeypatentsthatareduetoexpireafter2012。

Earningsestimates,though,havebeenincreasinginthewakeofanumberofencouragingdevelopments。

Thecompanypostedstrongsecond-quarterresultsanddoubleditssharebuybackprogramme。

ItalsowonendorsementfromadrugsadvisorycommitteeintheUSforitsblood-thinningdrug,Brilinta。

LikeWPP,AstraZenecahashealthyexposuretoemergingmarkets–oneofthekeydriversofitsrecentstrongperformance。

This,andthecash-generativenatureofitsbusiness,makesforanattractivecombination,whichisnotyetreflectedintheshareprice。

Intheaftermathofthefinancialcrisistheworldissplit–emergingeconomiesaredeliveringhighsingle-digitGDPgrowth,whiledevelopedeconomiesfretoveradouble-diprecession。

Oneofthebeneficiariesofhighemerging-marketgrowthistheenergyindustry,notablypowercompaniesinIndiaandChina,wherethereisastructuralenergyshortage。

EssarEnergy(LSE:ESSR),whichlistedontheLondonStockExchangeduringthefirsthalfof2010,isamajorplayerinIndianelectricity,gasandoilmarkets。

Ithasaclearstrategythatwebelievewilldeliverimpressivegrowthratesagainstthebackdropofrapidlyliberalisingenergymarkets。

Essarretainsacostadvantagerelativetocompetitors。

AsIndiaindustrialises,thegrowthoutlookispromising。

Sowhilethedebateaboutthestateoftheglobaleconomylookssettorumbleon,thesearethreestocksthatwebelievecandeliveragainstarangeofeconomicoutcomes。

Allarewellworthlookingintoonyourreturnfromholiday。

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