Back in the early 1970s, around the time I took a vested interested in the stock market, the Coca Cola Company introduced a new advertising campaign that went on to become one of the most popular advertising jingles ever: "I'd like to buy the world a coke!"
Today, as Coke's soft drink competitors saturate U.S. markets, the company has concentrated its expansion efforts abroad. Against the backdrop of a weak U.S. economy, Coke's overseas growth has contributed to the stock's decent performance over the past year. But I'm convinced that it could've performed better.
Fortunately, there is a way for us to profit from the worldwide recognition of Coca Cola's products. Two of the stocks in my global growth portfolios are poised to offer the type of profit growth and stock price increases I like to see.
The first is Coca-Cola FEMSA. This branch is the primary distributor of Coke products for Mexico and much of Latin America. The company's results have been impressive to say the least. Fourth quarter operating income was up 12.6% for FEMSA, while revenues were up 8%. More importantly, the company continued its expansion outside of Mexico and into the rest of the Latin America.
Brazilian volumes were up by double digits, and overall, non-Mexico sales accounted for 80% of revenue growth. Earnings for operations outside of Mexico grew by better than 40%. Since 2005, revenues and earnings have increased by over 50%.
The company has spent the money wisely, a claim supported by the 50% drop in total debt. Money that isn't spent on interest will drop to the bottom line in the years ahead and fuel the continued growth of Coca Cola FEMSA. The company's sales are increasing and free cash flow and profit margins are expanding.
We aren't the only ones who've taken notice. As large investors continue to look for opportunities outside the United States, they've turned to Coca-Cola FEMSA, which has yielded the type of buying pressure that can take us to new highs and beyond.
My next pick would be Coca-Cola Hellenic, based in Athens, Greece. The company bottles and distributes Coke products throughout much of Europe as well as Nigeria. All in all, they serve 28 countries with a total population of 550 million coke drinkers. Growth has been consistent and impressive. Since 2001, CCCH has averaged 14% a year earnings growth on 9% average revenue increases. Last year, earnings were up 24% as sales growth came in at 15%. We should notice that earnings are becoming a larger percentage of revenues. That can only mean that margins are expanding, one of our key fundamental variables that signify a great growth stock, especially for our Global Growth portfolio!
Great Growth for Coke
As the sector for carbonated beverages matures in key markets, the company has continued to diversify its product line. In 2001, carbonated beverages accounted for 90% of total sales. Today, that number is 63%, since the company's added juice, tea and even coffee drinks to their product line. They rolled out the new Coke Zero in 2007 and it was a tremendous success. Going forward, Coca Cola Hellenic expects earnings growth to stay in the 12-15% annual rate for years to come.
By claiming a stake in these two branches of the greater Coca Cola Company, investors are awarded the opportunity to profit from the world's ubiquitous desire to for Coke products. More importantly, they are an example of how my Global Growth newsletter can help you identify stocks outside of the United States that benefit from global trends.
Twenty-five years ago, the United States accounted for over 50% of Global Domestic Product and was a bigger consumer market than the rest of the world combined. Today, that number has staggered to approximately 25%. Given this new reality, investors need to venture outside of the United States in order to find the great growth stocks that offer consistent profits and build wealth.
I invite you to try Global Growth risk free. If you feel that your subscription doesn't help you become a better, more informed investor, you can simply cancel and receive a no-questions-asked refund for the remaining balance of the subscription. Try us today and find the type of great global growth stocks that my research shows have beaten the S&P 500 by a margin of 10-to-1!
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| Video Demo |
| Stock | Symbol | Grade | |
|---|---|---|---|
| Annaly Capital | NLY | B | BUY |
| Brookfield Ass | BAM | C | HOLD |
| Gladstone Comm | GOOD | C | HOLD |
| Kimco Realty C | KIM | C | HOLD |
| Plum Creek Tim | PCL | B | BUY |
| St. Joe Co. | JOE | C | HOLD |
| Washington Rea | WRE | C | HOLD |
| Stock | Symbol | Grade | |
|---|---|---|---|
| Christopher & | CBK | D | SELL |
| Gymboree Corp. | GYMB | B | BUY |
| J.C. Penney Co | JCP | D | SELL |
| Macy's Inc. | M | D | SELL |
| Nordstrom Inc. | JWN | C | HOLD |
| Target Corp. | TGT | C | HOLD |
| Tiffany & Co. | TIF | C | HOLD |
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