Tapping into the growing consumer class

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The $10 billion offer for Avon Products ( AVP , quote ) by the world's largest fragrance company Coty demonstrates the profit potential of investing in companies that provide goods and services to emerging market middle classes.

[caption id="attachment_55112" align="alignright" width="220" caption="Avon CEO Andrea Jung is making calls in 100 countries"] [/caption]This is why consumer product conglomerates such as Unilever ( UL , quote ) and Nestle ( NSRGY , quote ) have performed so well over the last year. Unilever has risen 11.17%, and at $61.67 a share, Nestle is close to its 52-week high. It is also a reason why Warren Buffett invests  so heavily in consumer giants with a global footprint. Jim Jubak agrees .

According to Forbes , 60% of Avon's sales and most of its revenue growth come from emerging markets. Avon's sales have increased by 5.2% over the past five years.

Unilever has achieved similar growth over that same period, and both its sales and earnings-per-share growth are rising on a quarterly basis. While the Great Recession did not help these companies, the consumer class around the globe still grew during that period, which is very bullish for their long term prospects.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

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