In terms of the backdrop, we’re looking at certainly slower growth into sort of 2020 and beyond, but within that we’re looking to sort of lift the bonnet and find companies that have their own engine of growth.

And really isolating for each of these businesses that we’re researching, what is the one thing that they can do, and they will be able to continue to do, on a three- to five-year basis that gives them that sustainable growth advantage, that gives them that right to win in the, in the marketplace? If we can find that, then we feel pretty confident that we’ve got a winning recipe for the next three to five years.

There are many ways that you can get the earnings growth that we’re, that we’re targeting. You can do share buybacks. We’re not against those, but it’s not our preferred method. You can cut taxes and get earnings growth. That’s not our preferred method. What we want to see is solid operating profit growth. And how do we want to get there? We want to get there by getting top-line growth. And we want to get that top line by getting some volume growth drivers that you see come through the business.

For example, there’s a brewer. It’s got brewing assets from Africa over to the US across Asia, a very large Belgian brewer. It had challenges. It’s a very large business. Its challenges were that there’s the growth of craft in the US. They’ve got market-saturated positions down in Brazil. We had owned this business in the past, but we had not been invested for some time. We felt like it had hit a growth wall.

When they announced their intention to list their Asian portion of the business, we thought this is interesting to be sort of specifically involved in that Asian portion where the growth would be better, waited to see what the valuation might be on the first iteration; the valuation looked a bit rich. They came back to the table and said, “Look, we’re going to release some of our further developed-market assets.” And we said, “Well, good, because we don’t want those out of Australia or New Zealand.” Came back as a pure Asian, pure-play dominant position in China, where you don’t have that issue with craft, where you do have that opportunity to premiumize. And we thought, “You know what? This has a 12-to-13-percent growth avenue that we can see carry on for the next three, four, [or] five years. That’s the kind of business that we do want to own in that geography. That’s a more appealing business to us.

And that’s the power of doing our homework. That’s the power of doing our research, not spreading ourselves too thin. Really focusing and concentrating our research efforts on where the growth is.

Dev Chakrabarti is Portfolio Manager/Senior Research Analyst—Concentrated Global Growth at AB

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams and are subject to revision over time.

AllianceBernstein Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom.

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