Credit Suisse: 27 Great Brands of Tomorrow

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The Credit Suisse Research Institute released the 27 Great Brands of Tomorrow that have the potential to outperform the market in the next 3-5 years. Their research shows that “Strong brand companies have consistently generated out-sized long-term growth and returns for shareholders.”

The 27 “Great Brands of Tomorrow” are:

  1. Alibaba.com
  2. Almarai
  3. Amazon (AMZN)
  4. Apple (APPL)
  5. BIM
  6. Capitec
  7. China Merchants Bank
  8. Commercial Aircraft Corporation of China
  9. Enfamil (MJN)
  10. Facebook
  11. Hyundai Motor
  12. Indian Hotels
  13. Julius Baer
  14. Li Ning
  15. Mahindra & Mahindra
  16. MercadoLibre
  17. Mercedes-Benz
  18. Polo Ralph Lauren
  19. Sonova Holding
  20. Swatch
  21. Tiffany & Co (TIF)
  22. Tingyi
  23. Trader Joe’s
  24. Tsingtao Brewery (OTC: TSGTY)
  25. Under Armour (UA)
  26. Uniqlo
  27. Yakult Honsha

Some of the companies that own the brands listed above are expanding into regions where they did not have a big presence before. For example, DaimlerChrysler (DCX) the owner of the global luxury brand Mercedes-Benz is now focusing on emerging markets where the demand for luxury products is growing. Last month the company announced that the sales of its high-end Mercedes-Benz autos in China shot up by 77% in 2009 compared to 2008. Simiarly Mahindra & Mahindra of India is slowly expanding in the US market with its cheap but high quality tractors for the farming industry. Mahindra & Mahindra is coompeting against established American player Deere & Co (DE).

New Site Feature: Stock Lists

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Recently we have added a “STOCK LISTS” tab on this site. The tab is on top of the site shown below:

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In this tab, we plan to add lists of stocks by sector so that it is easier for investors to access all stocks in a sector in one place. The stocks are listed in table format and are linked to Yahoo Finance. For example, all Railroad stocks are listed in one table for easier access. It must be noted that these lists include stocks from both the US and other countries traded in the US exchanges.

A sample of the stock lists already posted are as follows.

Stocks Trading on the New York Stock Exchange:

  1. The Complete list of Electric Utility Stocks
  2. The Complete list of Drug Stocks
  3. The Complete list of Coal Stocks
  4. The Complete list of Consumer Staple Stocks
  5. The Complete list of Railroad Stocks
  6. The Complete list of Food Stocks
  7. The Complete list of Trucking Company Stocks
  8. The Complete list of Water Utility Stocks
  9. The Complete list of Air Courier stocks
  10.  The Complete list of Airline stocks

Currently we have stock lists by sector. More types of lists will be added soon.

The Five Best and Worst Performing Latin American ADRs YTD

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With two months over for the equity markets lets take a quick look at the leading and lagging Latin American ADRs from a performance perspective.

The five best performing Latin American ADRs YTD as of 2/26/10:

1. Banco De Chile (BCH)
Country: Chile
Sector: Banking
YTD Change: 15.01%

2. GRUMA (GMK)
Country: Mexico
Sector: Food Producers
YTD Change: 13.34%

3. Nortel Invesora (NTL)
Country: Argentina
Sector: Fixed Line Telecom
YTD Change: 13.13%

4. Vina Concha y Toro (VCO)
Country: Chile
Sector: Beverages
YTD Change: 12.44%

5. Ecopetrol (EC)
Country: Colombia
Sector: Integrated Oil & Gas
YTD Change: 10.92%

The five worst performing Latin American ADRs YTD as of 2/26/10::

1. Cemex (CX)
Country: Mexico
Sector: Construction & Materials
YTD Change: -19.12%

2. Fibria Celulose S.A. (FBR)
Country: Brazil
Sector: Forestry & Paper
YTD Change: -19.66%

3. Grupo TMM (TMM)
Country: Mexico
Sector: Industrial Transportation
YTD Change: -20.21%

4.  Brasil Telecom (BTM)
Country:Brazil
Sector: Fixed Line Telecom
YTD Change: -33.33%

5. Centrais Eletricas Brasileiras-Eletrobras (EBR)
Country: Brazil
Sector: Electricity
YTD Change: -38.36%

Banco De Chile (BCH) is the top performer with a return of 15% YTD. BCH is consistent high dividend payer and the current yield is 6.57%. The next dividend payment is $3.90 with a record date of March 19th and a pay date of April 6, 2010. Ecopetrol (EC) of Colombia has a dividend yield of 5.62%. For the full year 2009,  the company increased production of crude oil and natural gas by 17% from 2008 and sales volume rose by about 19% compared to 2008. Cement and construction materials maker Cemex(CX) announced disappointing quarterly results in January.

Performance of Emerging Markets over the Decade

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The chart below shows the performance of emerging markets over the decade and from March thru December 2009:

Click to Enlarge

Emerging-Markets-Performance

Source: Credit Suisse Global Investment Yearbook 2010

Of the 24 countries listed above, Pakistan and Argentina are considered as Frontier Markets by index providers MSCI and S&P. FTSE views all the 24 countries as emerging markets. Israel was promoted to developed market in 2008 and South Korea in 2009.

On an annualized return basis, Hungary tops the list followed by Indonesia and Turkey. Among the BRIC countries, China was the lowest performer while India was the best performer over the last decade.

Why are merging markets important to an investor?

From the Credit Suisse Global Investment Yearbook 2010:

“Emerging and frontier markets are far too big to ignore. They account for more than 70% of the world’s population (over five times that of developed markets), 46% of its land mass (twice that of developed markets), and 31% of its GDP (almost half that of developed markets). And, taken as a group, their real GDP growth has been much faster than in developed markets.

These projections show the by now familiar consensus view that key emerging markets, especially the BRICs, will continue to grow rapidly, with China expected to displace the USA  as the world’s largest economy by around 2020, and with India overtaking the USA by 2050.

In Forbes’ 2009 ranking of the top global companies, three of the five constituents with the largest market capitalizations are from emerging markets. No fewer than 11 of the top 100, ranked by total market capitalization, are from China more than from any other country in the world apart from the USA.”

Click Credit Suisse Global Investment Yearbook 2010 to download the complete report in pdf.

The Nifty 50 BRIC Champions

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In an earlier post, we discussed about the companies from developed countries that have the potential to profit from emerging markets’ growth. Many companies in the emerging markets are already champions in their domestic markets and are poised to become global market leaders. This is especially true with BRIC companies.

The economic power is projected to shift from the US and Western Europe to the emerging countries in Asia and Latin America in the next decade and beyond. Goldman Sachs noted in a November report:

“Since 2001, we have focused on the increasing importance of BRICs countries in the
global economy; we believe they remain on a trajectory that will see their combined
output reach 50% of the G7 level by 2020 and parity between 2030 and 2050.” Emerging markets will see lots of action in the next few years and offer investment opportunities for global investors. Investing directly in emerging market equities requires access to those markets or one can invest via ADRs if they are available, ETFs or other vehicles.

Goldman Sachs has compiled a list of the ‘Nifty 50’ BRIC companies that are likely to become global winners in the next few years. Many of them are strong players in their respective industries. There companies were selected based on the following criteria:

  • Returns on capital
  • Industry positioning
  • Management quality (with respect to environmental, social and governance issues)

The Nifty 50 BRIC companies are:

[TABLE=401]

Petrobras(PBR), Vale(VALE), Gazprom(OTC: OGZPF)  were among the five companies with the largest market cap gains in this decade. With the global demand for natural resources rising, it is possible that they may continue the incredible growth into the next decade.