The next macro trend to follow will be the growth of the middle class. The World Bank has said that by the year 2030, developing nations will be 93% of the global middle class compared to 56% in 2000. The leading countries contributing to this growth are China (adding 52% of the growth) and India (accounting for 12%). As the middle class grows, the amount of different people with disposable income will grow. New middle class consumers will be eager to spend their newfound wealth in several key markets that will benefit greatly from this opportunity.
Here's a look at 5 companies that I believe could see significant revenue growth because of these of these new future consumers.
Priceline.com (PCLN): Priceline profits from the traveling side of the middle class. With newfound disposable income the first thing consumers want to do is travel. Priceline offers an extremely cheap alternative to classic hotel booking that is online and easy. The fact that Priceline is all done online, makes it an already global business that requires little capital to expand into the growing foreign regions. With a forward P/E ratio of only 21 and also the tag of being a 'cloud computing' stock, Priceline looks like a great entry around today's prices ($537).
MasterCard (MA): This credit card giant boasts a forward P/E ratio of only 15 and is growing profits in double digit percentages each year. Consumers in underdeveloped countries lack lines of credit which they can use to make larger purchases. MasterCard fills that need with a world renown brand name. There's no doubt they'll be able to garner some of the new market share in places like China, Indonesia, Brazil and South Africa where they already have office locations.
Spreadtrum (SPRD): This Chinese company is not only incredibly cheap with a trailing P/E of 8 and a forward P/E of 6 but also is experiencing an exceptional growth rate of 73% per year. Spreadtrum is a semiconductor stock involved in the 2g and 3g cell phone market in China. China is where the bulk of the middle class growth will come from and Spreadtrum is positioned perfectly at the front of a near commoditized market. As more people join the middle class, the more people will buy cell phones.
Ford (F): Ford is ready to profit from every type of new middle class member from tree-hugger to pick up truck guy. Their new full line of cars has received excellent reviews worldwide and is already known internationally. As families in China/India all make the move from being 1 to 2 car families Ford should see a big piece of that revenue. Not to mention already being traded for a sub 7 P/E, F is cheap and ready to get bigger.
Apple (AAPL): At this point in time, owning any sort of iPod or iPhone has become a symbol of wealth or at least financial comfort. Until any product comes close to rivaling Apple's, there's no reason to think the iPhone won't do as well with the new middle class as it has with the old one. Apple also brings a forward P/E of 12 to the table and almost $30 billion of cash on its balance sheet. It would be hard to find a more secure, growing and well run company.