More than ever, we should turn our trend-spotting eyes to beyond our borders. In our increasingly globalized economy, there is money to be made everywhere. Trends that used start in the United States can be seen starting in China, India, Japan, Germany, Argentina... to name but a few countries. Right now, the dollar is weak, so investing in foreign companies may make more sense now than ever.
Looking outside your borders, you will see that China is growing in leaps and bounds, which means it needs more and more water systems, but it has a serious pollution problem.
Follow the company trail, and you'll find Veolia Environnement (NYSE:VE), the world's largest water utility. Veolia has four divisions: Veolia Water (water), Onyx (waste management), Dalkia (energy services) and Connex (transportation). Based in France, it has a international presence; among recent acquisitions are waste management companies in the UK, Belgium and Germany. Even more importantly, it keeps winning contracts in China for water management and purification. This January, it struck a contract to acquire 45% of the Lanzhou water supply company in the capital of the Gansu province.
Last week, it announced it won a 30-year contract to supply drinking water to Tianjin, China to supply drinking water. If Veolia keeps winning these long-term contracts in this fast-growing market, I think it is a terrific pick.
However, the potential in China comes with an asterix. While they've opened their borders and embraced the capitalist model, they still have a communist government and the rules are very different there than here in the US. This brings me to my second point about this "World is Your Oyster" trend tip. Just because something looks like a good financial opportunity abroad, doesn't mean you don't have to be extra vigilant. You must tread lightly and do your research. Authoritarian governments can interfere with the ability of foreign companies to do business in these territories.
Type of stock: The largest water utility in the world, Veolia is engaged in waste management, and related services -- a necessary business in polluted, fast-growing areas like China.
Price target: Trading at $85, this stock has gotten a boost this past week. I think the trend toward global businesses involved in environmental clean-up -- particularly in the water arena -- is hot, and I think that even at this price we'll see real growth in this stock in the next few years.