BOSTON (TheStreet) -- Forget the acronyms, whether it's LTRO, EFSF or ESM. Jeff Auxier, manager of the Auxier Focus Fund (AUXFX) - Get Report, says investors should stop kidding themselves about Europe and look elsewhere for opportunities.

More specifically, U.S. companies that stand to benefit from emerging markets in 2012 and beyond.

The latest news out of Europe is the European Central Bank's three-year LTRO program, which aims to lend $645 billion to banks in exchange for assorted collateral, like loans. The expectation is that the banks will use the low-cost funds to buy government debt and help settle the sovereign debt markets overseas. Market observers already are questioning the wisdom of using debt to solve a debt problem. The LTRO -- long-term refinancing operation -- comes at a time when investors have been told the EFSF (European Financial Stability Facility) and the ESM (European Stability Mechanism) would help stem the crisis.

"We are in for some painful deleveraging out of Europe," Auxier says by phone from his office in Lake Oswego, Ore. "Our approach has been that you're not going to get a lot of help from the economy so you have to make exceptional buys. We wait for the market to serve up opportunities. We're waiting for the extremes to make our buys."

Auxier's fund returns have dwarfed the benchmark

S&P 500 Index

. Since inception in July 1999, the Auxier Focus Fund has an average annual return of 6.2% as of Nov. 30, eclipsing the 0.9% gain on the S&P 500 in the same period. Auxier's fund also outpaced the annualized total return of the benchmark over the past one, five and 10 years.

His best idea to continue that winning performance is to look at emerging markets, where workers out in the fields are becoming the new middle class in their countries. Having lived on a farm for the past 23 years, Auxier says he knows how some of the emerging populations feel about opportunities they have before them.

"I know what it's like. You get aspirational," he says. "Thirty years ago, less than 10% of all Chinese people had tasted chocolate. They'll consume more protein, like pork. Hopefully they'll be buying

Ben & Jerry's

or something."

Auxier says he's focused on companies that can provide value by going into markets like Indonesia or the Philippines, particularly the necessity items. He argues that the commodity boom could see the same fate as the housing bubble. With input costs so high and demand from Europe slowing, commodity costs could fall. Auxier says that will help the low-cost necessity businesses in 2012.

"The true demand is out of Asia. The U.S. is so over-indebted that you have to go elsewhere," Auxier says. "Look at the numbers out of

McDonald's

(MCD) - Get Report

. The headline you don't read about is

Starbucks

(SBUX) - Get Report

with same-store sales up 30% in Asia. It's unbelievable. Some of our companies are seeing the best numbers they've ever seen even with all the negative news out there."

Auxier offers up

five stocks in his fund's portfolio

that plays into his investment theme of U.S. companies with opportunities in emerging markets in 2012, which are highlighted below and on the following pages.

Unilever

(UN) - Get Report

Company Profile

: Unilever is a multinational consumer-products maker. The company's portfolio of brands includes Lipton, Dove, Ben & Jerry's, Q-Tips, Suave, Degree, and Klondike, among many others.

Share Price

: $32.92 (Dec. 21)

Auxier's View

: While Auxier says investors need to take a realistic view that the painful deleveraging in Europe is still to come, he also says it makes sense to look at crisis for opportunity. One such prospect for his fund is Unilever, the personal products maker.

"You have a company with the widest distribution of any company in the world. They're in 180 countries," Auxier says. "You're talking about a global population expanding. When you get a little money, you're going to try to get better shampoo. It's a play on subpar operating margins because of the commodity cost pressures. So lower input costs are a way to make money, but it's also about day-to-day items."

Although Auxier agrees that investing in Unilever is a "dull boring story," he notes that the company has been undermanaged and that the brands haven't been energized. He expects that to change with the company's CEO Paul Polman, who came over to Unilever less than three years ago after previous gigs at

Nestle

and

Procter & Gamble

(PG) - Get Report

.

As of Nov. 30, Unilever was the ninth-largest position in the Auxier Focus Fund with a portfolio weighting of 1.5%.

Philip Morris International

(PM) - Get Report

Company Profile

: Philip Morris International is an international tobacco company best known for its cigarette brands Marlboro, L&M and Parliament.

Share Price

: $78.10 (Dec. 21)

Auxier's View

: Philip Morris is a stock that Auxier has owned personally for a whopping 30 years. He argues that the cigarette maker is not a domestic story but is instead all about the international story.

"People in Indonesia and the Philippines, they're driving the company because they want western brands," Auxier says. "Most recently, it had one of the best quarters I've seen in 30 years. It's a little controversial because of the products, but it's a mundane business. It's an emotional situation rather than the fundamentals. People are buying the product because they want to buy it. They're not forced to."

One of the other attractive attributes of Philip Morris is the ever-growing dividend payment. The stock currently has a yield of nearly 4%, about double the yield on the 10-year U.S. Treasury.

As of Nov. 30, Philip Morris was the largest holding in the Auxier Focus Fund with a weighting of 2.5%.

Pepsi

(PEP) - Get Report

Company Profile

: Pepsi is a global food, snack and beverage company. Its brands include Pepsi, Mountain Dew, Tropicana, Gatorade, Lay's, Doritos and Lipton.

Share Price

: $66.13 (Dec. 21)

Auxier's View

: Auxier notes that Pepsi shares don't appear cheap as they trade at 14 times next year's earnings, slightly above the broader S&P 500. He says that may be due to the company's capital allocation, pointing out that Pepsi's management may have bought too many companies.

That said, Auxier is extremely impressed with Pepsi' international sales, particularly in the company's foods segment like Frito-Lay and Doritos.

"These are some great business brands, from Frito Lay to Gatorade," Auxier says. "The brands are there to reach out to aspiring middle classes. Plus, it's one of the lower valuations over the past 10 years. Their margins have been under pressure because of high commodity prices, but I see that abating in 2012."

Auxier says that he first bought Pepsi nearly 30 years ago during the Mexican accounting scandal, again noting that crises create opportunity. "We like to buy these types of businesses when they are out of favor," he says. "When Pepsi shares dropped down into the $50s, we were more aggressive. But this is still a great international play."

Pepsi was the second-largest holding in the Auxier Focus Fund as of Nov. 30 with a weighting of 2.5%.

Molson Coors Brewing

(TAP) - Get Report

Company Profile

: Molson Coors is the well-known beer distributor. It's global portfolio of brands includes Coors, Molson, Blue Moon, Amstel Light, Heineken, Miller, Foster's and Carling.

Share Price

: $43.34 (Dec. 21)

Auxier's View

: When investors think of necessities for populations in emerging markets, they probably think of food, toilet paper, toothpaste and other essentials. But beer is right up on that list too, Auxier says.

"We like this one because it's the oldest brewery in North America," Auxier says. "They are moving into the craft beers and international where the growth is. Right now, it's priced for no growth."

Auxier says he was buying the stock at nine times earnings (the stock currently has a forward price-to-earnings ratio of 11, which is still slightly below the broader market). He also notes that the company has a very underlevered balance sheet.

"We like those type of businesses that do not require financial engineering to make money," he jokes, adding that the stock has an attractive 3% dividend yield.

Molson Coors was the third-largest holding in Auxier's fund as of Nov. 30 with a portfolio weighting of 2.4%.

BP

(BP) - Get Report

Company Profile

: BP is one of the largest energy companies in the world. The company finds, extracts, moves and sells oil and gas products across the globe.

Share Price

: $41.83 (Dec. 21)

Auxier's View

: BP is still shaking off the effects of the massive oil spill in the Gulf of Mexico back in April 2010, which is one of the reasons Auxier picked up shares for the fund.

"It's negative. People are down on it," Auxier says. "These are the types of businesses that people don't like because they read the papers. But we have a saying: We always like bad headlines with a good cash flow."

Auxier says that BP has a "tremendous" balance sheet, noting that the company -- like most international oil companies - are very underlevered and have strong earnings power. Auxier says BP is currently trading at less than four times its 2012 cash flow, which is "really cheap." A dividend yield of 6% doesn't hurt, either.

The oil giant isn't as large a holding af the other stocks on this list as it has a weighting of only 1% in Auxier's fund, although that still makes it one of the funds 25 largest holdings.

>>To see these stocks in action, visit the

5 'Exceptional Buys' for 2012

portfolio on Stockpickr.

-- Written by Robert Holmes in Boston

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