Consider these six stable U.S. and European companies that do a lot of business in developing countries. By Andrew Tanzer, Senior Associate Editor June 24, 2009 Americans are eager to put some of their money into emerging markets again. It's easy to see why. The U.S. economy is struggling to overcome the triple whammy of years of excess consumer spending, too much borrowing and too little saving. Climbing out of that morass will not be easy.Emerging markets such as China, India and Brazil have little consumer and real estate debt and rapidly rising consumption. Just think of it: Those three countries alone have 2.7 billion residents, hundreds of millions of them ascending to -- or seeking to ascend to -- the consuming middle class. Of course, emerging-markets stocks tend to be volatile. Countries such as China and Russia do not have proper respect for property rights and the rule of law. Local accounting and corporate governance may be suspect. But there's a way to access those attractive markets while avoiding several of the risks: investing in stable, well-managed U.S. and European companies with large and growing businesses in developing countries. Here are six attractive, multinational companies that sell products that are affordable to a billion consumers in the developing world. Advertisement Avon Products (symbol AVP) is an old U.S. company (dating from 1886) that's become a player in some of the 21st century's fastest-growing markets. The global manufacturer and marketer of beauty products derives more than 70% of its sales and profits from developing markets, led by Latin America. Avon's direct-sales model (it has 5.8 million sales reps in 110 countries) works beautifully in nations such as Brazil, Russia, Turkey and China. The multilevel marketing system requires little capital outlay, which is one reason that Avon generates so much free cash flow and boasts a prodigious return on equity of 70%. At the stock's June 24 close of $26.17, it sells for almost 17 times estimated 2009 earnings of $1.57 per share and yields 3.3%. Colgate-Palmolive (CL), dating from 1806, is even older than Avon, but it, too, generates most of its sales and profits in the third world, led by Latin America. Colgate focuses like a laser on toothpaste, toothbrushes and other oral-care products (it commands 45% of the globe's toothpaste market). It has been relatively immune to competition from private brands -- a development that has hurt Procter & Gamble (PG) and producers of paper products and processed foods. Colgate is remarkably consistent and, with excess cash generation, has an outstanding record of buying back shares and boosting dividends. Not surprisingly, Colgate trades at a premium price; at $70.19, it sells at 17 times estimated '09 profits of $4.22. The stock yields 2.5%. Switzerland's Nestlé (NSRGY.PK) is the quintessentially cosmopolitan multinational corporation. It's done business in China for 130 years and in India for 90 years. Today, the world's largest food company generates 35% of its sales in emerging markets, leaning on its industry-leading distribution system. Advertisement It has packaged and tailored products such as ice cream, soups and confectionery to the needs of the third world. At $37.40, Nestlé sells for 15 times estimated '09 earnings of $2.45 per share and yields 3.3%. (If you purchase this stock, consider placing it in a taxable account so that you can apply the Swiss withholding tax on Nestlé's dividend to your U.S. taxes.) It shouldn't surprise you that citizens of emerging markets have their vices, too. Many view brand-name liquor and cigarettes as affordable luxuries that confer a bit of status. Two British sin stocks and an American one benefit. Diageo (DEO) is the world's largest liquor producer and marketer, with a lineup that includes Smirnoff vodka, Johnnie Walker scotch and Tanqueray gin. As with Nestlé, Diageo is much bigger than its largest competitor (Pernod Ricard, of France), giving it an edge in distribution, which is crucial in alcoholic beverages. The stock, at $57.25, yields 4.0% and sells for 13 times forecasted profits of $4.50 per share for the fiscal year that ends June 2010. Cigarette consumption shrinks every year in the U.S., Japan and Western Europe. But in the developing world, tobacco use is growing. That explains why Philip Morris International (PM) and British American Tobacco (BTI) continue to increase sales volumes. When you combine that with steady price increases (because tobacco companies peddle an addictive product, they have an unusual ability to jack up prices), you generate a nice stream of rising profits, cash flow and dividends. Advertisement Philip Morris owns seven of the world's top 15 cigarette brands, including Marlboro, L&M and Parliament. Like BAT, Philip Morris now generates the bulk of sales in emerging markets. It's particularly strong in Eastern Europe and Asia, including the Chinese market, where PM is the first foreign tobacco company permitted to invest. The stock, at $41.63, yields 5.2% and trades at 13 times estimated 2009 profits of $3.09 per share. With a roster of brands that includes Kent, Dunhill, Lucky Strike and Pall Mall, BAT, the world's second-largest cigarette company after Philip Morris, is a powerhouse in markets such as Latin America, Africa, Russia and the Middle East. On June 17, it announced it was acquiring a leading cigarette maker in Indonesia, the world's fifth-largest market. BAT has a sterling record of raising dividends and, with the stock at $55.31, yields 4.5%. The shares trade for 11 times this year's estimated earnings of $4.87 per share.