A new growth lifeline

Emerging markets, especially China & India have been popular over the last few years among investors. As growth comes to a standstill in much of the developed world, these two are growing at close to double-digit rates.

But investors seemed to have missed a slightly different angle to the new growth story. One need not invest in companies based in India or China to benefit from their growth. In a number of sectors, the expertise that U.S/European companies have built up over the years means that they are likely to get win many of the contracts. In many cases, due to the sheer size of the population, these new wins also tend to be among the largest these companies have seen to date, and it could only get better.

As one example, in an earlier opst I mentioned companies that make ATMs. Another example would be a company like Insituform (INSU), which handles various municipal contracts in the U.S. Insituform just got a $35 million sewer construction contract in Delhi, its largest such contract to date. The stock itself is beaten down, while insiders are buying. The company now seems to be set for a new growth phase. How many will miss it ?

Along the same lines, look at AECOM (ACM), which went public just a few months ago. The stock has already retreated due to slowing commercial activity in the U.S. But AECOM is likely to derive a large portion of its gains outside the U.S. Even today, a substantial part of its contracts are in the Middle-East & Asia. Isn't AECOM a safe & sound way to bet on emerging markets ?