The British are invading the United States (yes, once again), but this time they're not bringing Redcoats, the Beatles, or Harry Potter with them.
They're bringing groceries.
Groceries?
Yes, groceries. In 2006, British megaretailer Tesco announced that it was expanding its $60 billion business to the U.S. markets, putting it in direct competition with Wal-Mart
Tesco is particularly threatening to these companies because it operates very differently from traditional U.S. retailers. Tesco stores come in different formats, ranging from Tesco Express (akin to a convenience store) to Tesco Extra -- 60,000 square-foot megastores that sell everything from groceries and electronics to furniture and clothing.
This store-size variety gives Tesco a hand in all levels of retail, from quick stop-and-shop food purchases to big-ticket items such as televisions. Typically, U.S. retailers specialize in one type of retail or the other.
If you still think Tesco's venture into the U.S. markets is much ado about nothing, consider that Tesco is operationally strong, has doubled its net income in the past four years, and has already been successful in its international projects, generating more than $16 billion in international sales in fiscal year 2006.
What this means for investors
The Tesco example is just one of many confirming that the markets are going global, and that American investors would be remiss to invest solely in U.S. companies.
And just as American multinationals McDonald's
Getting to know you
Many U.S. investors already know the benefits of holding foreign stocks. We've seen how the best markets of 2006 were found outside of America. Unfortunately, many of us aren't sure where to find good foreign stocks. After all, how many of you had heard of Tesco before reading this article?
We're much more familiar, and perhaps more comfortable, investing in companies like Procter & Gamble and Wal-Mart -- you know, good ol' American companies to whose products and stores we're exposed every day. But Fools who simply focus on companies they know might be missing out on some great growth opportunities found overseas.
The Foolish bottom line
The success of international markets in the past years show that there a lot of great stocks to be found overseas. It's not always easy, however, to spot them early in their growth stages. That's probably because they've already hit the big time by the time you've heard of them.
For help finding some you've never heard of, take a free look at The Motley Fool's new international investing service, Global Gains, which is designed to help you find the best foreign stocks and help you understand their businesses from the bottom up. Led by Fool senior analyst Bill Mann, the Global Gains team looks for foreign stocks based in stable political and economic environments, with strong fundamentals and plenty of room to grow.
If you're interested in seeing all the Global Gains picks, as well as receiving two new international stock ideas each month, follow this link for more information about a 30-day full-access free trial to the service.
Todd Wenning thinks the most misguided British invasion was the War of 1812. He does not own any stocks mentioned in this article. Wal-Mart and Coca-Cola are Motley Fool Inside Value picks. Whole Foods is a Stock Advisor choice. The Fool's disclosure policy will defend its isle, whatever the cost may be.
