Yum! Brands (YUM), parent of the Pizza Hut, Taco Bell, and Kentucky Fried Chicken brands, and McDonalds (MCD) continue their push into emerging markets. China is YUM's largest market now, comprising 42 percent of total revenue. In the second quarter, sales in China surged 33 percent year-over-year as same-store jumped 17 percent. One note of caution here is the pressure from rising commodity costs. In its latest sales report, the Golden Arches' August comparable global sales growth of 3.5 percent missed analysts' calls for 5 percent. YUM is trading near $52, about in the middle of its $44.80 to $57.75 52-week range. MCD is trading near $86, in the upper end of its $72.14 to $91.22 52-week range.
3M (MMM), a diversified manufacturer and technology company with operations in more than 65 countries, has invested abroad and is expanding through both organic growth and acquisitions. The company has a solid capital structure and a 2.9 percent dividend yield. MMM is trading near its 52-week low of $76 and is down nearly 12 percent so far in 2011.
The Dow Chemical Co. (DOW) has been expanding in emerging markets and in its Q2 earnings report hiked its outlook. There is an attractive 3.5 percent dividend yield. The stock trades near $25.75, at the bottom of its 52-week range, though some analysts stress that the price-to-book value remains high.
Two of the bigger tech firms that have already grown an emerging market presence—and look to continue—are Intel (INTC), trading near $20.28, about in the middle of its $18.20 to $23.96 52-week range, and International Business Machines (IBM), at $162.42, in the upper end of its $128.43 to $185.63 52-week range.
Several analysts point to Caterpillar (CAT) when thinking of companies positioned to benefit from global construction growth. The world's largest producer of earthmoving equipment sells plenty of machinery to emerging markets and is making more of its equipment in plants operating right in those markets. CAT, which pays a 2.2 percent dividend yield, is drifting in the lower portion of its $70.80 to $116.55 52-week range, last near $83.
Similarly, Deere & Co. (DE), trading near $75, has increased its manufacturing presence directly on Chinese soil. It offers a 2.1 percent dividend yield. Expectations for stronger foreign capital inflows to China due to signs of slowing inflation, is seen as a boon for the cyclical manufacturing sector.
Sector-specific exchange-traded funds (ETFs) can also provide export exposure. They include:
Market Vectors Agribusiness (MOO): Tracks the DAXglobal Agribusiness Index, a benchmark for companies that generate at least half of their revenues in agriculture. The United States is one of the largest exporters of livestock, grains, and other food products to markets around the world. Some 40 percent of MOO's assets are U.S. stocks, with the remainder spread across Canada, Singapore, Switzerland, and other smaller contributors.
Aerospace & Defense (PPA): Offers exposure to companies involved in the development, manufacturing, operations, and support of U.S. defense, homeland security, and aerospace operations, as well as other industrial goods.
Semiconductor HOLDRS (SMH) gives the bulk of its holdings to Intel, Texas Instruments, and Applied Materials, and all three compete well on global markets, standing to benefit from reduced trade barriers that could allow them to better compete with heavily tech-dominant Taiwan and South Korea.
Dow Jones U.S. Pharmaceuticals Index Fund (IHE): With much of the focus of late on U.S. passage of a healthcare reform package that is seen as less-than-favorable to Big Pharma, the industry could find greater overseas opportunities.
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