Search This Blog

Saturday, December 5, 2009

Earnings Increasing in this Recession ?

East of NY and West of LA

“Some companies expect their earnings to increase by 20%, 30%, or more next year,” Steve said, brightening somewhat.

“In this recession? How can they do it?” I asked.

Simple,” Steve says. (By the way, Steve edits The Bond Trader.) “They’ve weaned themselves off the U.S. economy. Many parts of the world are growing faster than the U.S. And these companies are simply reacting to the fact that 76% of the world’s GDP now comes from developing nations.

“The companies making the biggest profits these days have a firm footing in the markets east of New York and west of Los Angeles. A big chunk of their revenues still come from the U.S. But many of them now get less than half of their profits from domestic sales. And that percentage is going down every year.”

For example, Steve likes Caterpillar. In 2010 Caterpillar’s earnings could jump as much as 75%. But in the U.S., its profits will gain little if any ground. Where will the increase in earnings come from?

61% of Caterpillar's sales are outside of the U.S. Most of Caterpillar’s growth is coming from emerging markets.

The infrastructure boom in the emerging world should be feeding Caterpillar’s profits for years to comeRead the full story.

No comments:

Post a Comment