Invest in the Land Down Under

Although the global economy has rebounded sharply from the dark days of 2008 and 2009, there are several hangover effects still looming.

Among these are:

• Enormous government debt loads from bailouts and stimulus packages
• Unsustainably low interest rates
• Struggling financial sectors
• Rising political instability

Most developed economies around the globe are dealing with one or more of these serious long-term issues. There is one country, however, that has managed to escape all of these problems.

That place is Australia.

Australia is a land rich in natural resources and has certainly benefited from the recent surge in commodities. It is the largest exporter of coal in the world, for instance, accounting for 29% of global exports.

More Than Just Commodities

But Australia is much more than just a mining and agriculture economy. The services sector actually accounts for nearly 75% of GDP, including a very stable financial services industry.

Australia also ranks 3rd on the Heritage Foundation’s 2011 Index of Economic Freedom (Hong Kong is #1; the U.S. ranks 9th). The Land Down Under has been one of the fastest-growing developed economies of the last 20 years thanks in large part to deregulation and reduced trade barriers.

In fact, the country of 22 million people has experienced a remarkable 20 consecutive years of economic growth, even in spite of the global financial crisis.

No Crisis Here

The Great Recession that severely affected economies around the world left Australia virtually unscathed. The country experienced just one quarter of negative GDP growth, which doesn't even fit the technical definition of a recession, and it actually managed to grow by 1.2% in 2009.

Its central bank has raised its key policy rate 7 times since late 2009 (it currently stands at 4.75%), and its unemployment rate is an enviable 5.0%. Moreover, its public debt as a percentage of GDP stands at just 22%, while other developed economies are rapidly approaching, or have already surpassed, the dangerous 90% level.

The world’s smallest continent has a lot of things going for it, and savvy investors may want to consider these 4 great Australian stocks:

Alumina Limited (AWC - Snapshot Report) is a leading resource company from Australia with a focus on alumina, the feedstock for aluminum smelting. It owns 40% of a joint venture with Alcoa called Alcoa World Alumina and Chemicals, which is the world’s largest alumina producer.

Shares are trading at 17x forward earnings, in-line with the peer group. It also pays a dividend that yields 2.5%. Alumina is a Zacks #2 Rank (Buy) stock.

Westpac Banking Corp (WBK - Snapshot Report) is Australia's oldest bank, established in 1817. It provides a broad range of financial services to retail and institutional clients.

Unlike many banks in the U.S. and Europe, Westpac produced solid financial results in 2008 and 2009 thanks to prudent lending.

The company pays a dividend that yields a hefty 6.1%. It is a Zacks #2 Rank (Buy) stock.

Coca-Cola Amatil (CCLAY) is Australia's largest soft-drink manufacturer. It is a Zacks #2 Rank (Buy) stock.

Shares trade at 17x forward earnings, in-line with its peers, and its PEG ratio is a reasonable 1.7.

The company pays a dividend that yields 1.6%. The Coca-Cola Company (KO - Analyst Report) owns 30% of shares outstanding.

BHP Billiton (BHP - Analyst Report) is a diversified natural resource company headquartered in Melbourne. It is the world's largest mining company in terms of revenue and the world's third largest company by market cap.

Based on current Zacks Consensus Estimates, EPS is expected to grow 42% in 2011 and 45% in 2012. Valuation is attractive with shares trading at 15x forward earnings, a discount to the industry average of 17x. It sports a PEG ratio of 1.0.

The company pays a dividend that yields 2.0%. It is a Zacks #3 Rank (Hold) stock.

Conclusion

With tons of natural resources and one the freest economies in the world, Australia should continue to enjoy strong economic growth for years to come. These 4 stocks are a great way for savvy investors to capitalize on the growth in the Land Down Under.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

Read the full analyst report on WBK

Read the full analyst report on CCLAY

Read the full analyst report on BHP

Read the full analyst report on AWC