A Celtic tiger, Cooper Industries Plc (CBE, quote) will benefit greatly from the coming middle-class boom.
It is an important component of the Irish exchange traded fund, MSCI Ireland (EIRL, quote); and other exchange traded funds (Mid-Cap Core ETF, CZA, quote; Morningstar Mid Core, JKG, quote, and Mid-Cap Value ETF, VOE, quote).
Cooper Industries manufactures and sells electrical products. In a recent article on MSN Money, “Get ready for the middle-class boom,” Jim Jubak pointed out that millions, if not billions more consumers will become more affluent in the decades ahead. According to Jubak, the Mckinsey Global Institute projects the Indian middle class to be 583 million and the Chinese middle class to be over one billion by 2030. All of these homes, offices, and automobiles will need electrical products.
Now around $51, the share price for Cooper Industries is projected to reach $61.27 over the next year, according to the analyst community. Over that period, earnings are expected to fall to just 11.81 a share. Quarterly earnings growth is increasing by almost 300%.
Obviously, that growth rate cannot be sustained. But the dividend of 2.29% can be. With a payout ratio of only 30%, there is ample room to increase the dividend. A price-to-earnings growth ratio of 0.99 provides plenty of support for future dividend hikes.
Cooper Industries is up more than 11% for the month. It is trading above both its 20-day and 50-day moving averages. When millions and billions more across the globe start entering the middle class, the trend will be even more the friend of the shareholders of Cooper Industries.