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All Contents © 2017The Kiplinger Washington Editors
By Luce Emerson
| August 2017
In a world where most of the future GDP growth will be driven by emerging economics, it makes sense to look for companies who do a lot of business outside the U.S. Shareholders benefit from secular domestic trends and immense international growth opportunities.
For those who want international exposure but via companies listed on U.S. exchanges, you need not look far. While they do not abound given overall market gains, attractively priced, high quality multinational businesses do exist.
With that in mind, here are three U.S. stocks across food and beverage, digital payments and travel with international growth opportunities.
Prices and data are from the original InvestorPlace story published on August 28, 2017. Click on ticker-symbol links in each slide for current prices and more.
This slide show is from InvestorPlace, not the Kiplinger editorial staff.
Mike Mozart via Flickr (modified)
Corona, California-based Monster Beverage Corporation (MNST) has definitively left its quaint roots in the Hansens juice business and grown to become, well, a monster.
It dominates the energy drink market, which is its most important segment from a revenue generation standpoint, representing 89.4% of sales as of last quarter.
One prong of Monster Beverage’s growth strategy is innovation, which means product line extensions. Consistently coming up with new flavors and twists under their brands to attract new customers and boost volumes is crucial and MNST has been executing on this front.
In April and May alone, six new energy drink products came to market with names that emphasize the company’s focus on differentiation (Mutant® Super Soda, White Lightning, Monster Hydro Mean Green, Manic Melon and Tropical Thunder). And indeed, differentiation has been a key to their success in a world where the beverage aisles are already overloaded with hundreds of products. Monster has seen immense success with their bold graphics and a distinctive look to maximize their visibility and identification.
The other prong of MNST’s growth strategy, as is the case for many F&B companies, involves expanding internationally. Net sales abroad currently stand at about a quarter of total sales, and with such strong brands in place, Monster is looking to increase that brand. They’ve been seeing increased volume due to higher international consumer demand and intend to stoke further sales growth. So far, MNST has been succeeding on this front: 2014 to 2015, gross sales to customers ex-U.S. were up 8.4%, from 2015 to 2016, they were up a very promising 24.6%.
Upon signing a distribution agreement with The Coca-Cola Co. (KO), Coke owned a 16.7% stake in MNST. The partnership has been crucial to MNST’s international expansion plan and Coke’s further dominance in a growing, niche market. Given the synergies between the two companies, and MNST’s attractive growth profile, I think an acquisition remains a distinct possibility and not a far-fetched one.
Kārlis Dambrāns via Flickr
Visa Inc. (V) is perhaps the epitome of an extremely profitable cross-borders payments businesses.
With the demands for global digital payments increasing exponentially, Visa is top dog in terms of market cap, sales and arguably brand strength. There are over 3 billion Visa cards in circulation accepted at 44 million locations and the network continues to grow.
The great news for Visa and its shareholders is that as the payments industry makes the inevitable shift from cash and check to digital/card, V makes more money. That is, the economics are even more lucrative for every dollar spent on digital; a swipe on a physical credit card processing machine, 15 cents is V’s take vs. 43 cents on a digital Visa card.
On the international front, V has been uniquely establishing direct relationships with governments. China has proved tricky with specific timing and ultimate costs still uncertain, but strides are being made elsewhere.
In Egypt, Visa signed a memorandum of understanding with for a G2C program. For Visa, there is potential for 60 million new accounts and additional $100B+ in annual processing volume. And other partnerships are being built as we speak. This $235 billion market-cap company is just getting started.
As the holding company for leading online travel agencies (booking.com, agoda.com and priceline.com), meta-search service (KAYAK), rental reservation service (Rentalcars.com) and restaurant reservation service (opentable), Priceline Group Inc. (PCLN) is a powerhouse in the online travel market.
Incidentally, the size of the travel market outside of the U.S. is significantly greater than the domestic market. As such, recent international online travel growth rates have substantially exceeded, and are expected to continue to exceed, the domestic growth rates. So, it’s very much a big fish in a big pond.
For the last fiscal year, the international business (majority of sales attributed to booking.com) were 88% of PCLN’s gross profit. Booking.com is PCLN’s most important brand that has benefited from the increasing availability of accommodations on the site. With a more fragmented hospitality market outside of the U.S., Booking.com stands to further attract properties to list on the site.
From PCLN’s 2016 fiscal year to 2017, 1,695 new properties were added to the site every single day! Booking.com included over 1,340,000 properties on its website as of June 30, 2017, which included over 721,000 vacation rental properties compared to 965,000 properties (including over 467,000 vacation rental properties) as of a year prior. Scale and branding leave PCLN in a sweet spot even if new initiatives like mixing artificial intelligence, Alexa and Kayak haven’t panned out yet.
This article is from Luce Emerson of InvestorPlace. As of this writing, she held none of the stocks mentioned.
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