5 Stocks for the Global Investor

Investing pundits agree that we need to put the power of international investing to work in our portfolios.

Put the value of diversification aside for the moment. The returns themselves are simply too good to pass up. China's benchmark stock index is up more than 200% in the last year, despite the government's efforts to put the brakes on an overheated economy. The indexes of Brazil and Mexico are up more than 40%, compared with only 12% for the S&P 500.

The good news is that you don't have to overcomplicate things to get a share of those returns.

Does anyone speak Portuguese?
A number of large American and European companies that trade on our domestic exchanges can get you that extra zing from emerging markets and reduce some of the volatility that investors can experience in these economies. That's because these operations make up only part -- albeit a significant part -- of the whole.

Accordingly, the following five stocks -- all of which are on my personal watch list -- have significant exposure to countries around the globe. Consider these a starting point for further research.

Company

Non-U.S. Revenue

CAPS Rating*

3M (NYSE:MMM)

61%

5 stars

Diageo (NYSE:DEO)

69%

5 stars

Yum! Brands (NYSE:YUM)

41%

4 stars

Hewlett-Packard (NYSE:HPQ)

65%

4 stars

IBM (NYSE:IBM)

61%

3 stars

Geographic revenue for last fiscal year provided by Capital IQ, a division of Standard & Poor's. CAPS Rating out of a possible five stars.

Breaking it down
Diageo, a U.K.-based beverage company, does more than two-thirds of its sales outside the United States. Its Smirnoff, Johnnie Walker, Bailey's, and Guinness brands are known around the world. Double-digit sales growth in Asia, Latin America, and Africa carried the company in the last fiscal year, as European sales slowed.

IBM is also trying to cash in on emerging markets. According to its most recent 10-Q, Brazil, Russia, India, and China "are among the fastest growing IT markets in the world, and the company is investing to capture the growth." In the second quarter, revenue from Brazil grew 9%, Russia 52%, India 32%, and China 31%. Growth in the Americas was only 5%.

Yum's Taco Bell restaurants, HP's printers, and 3M's Post-It Notes are all mainstays in the U.S., but these companies also have aggressive international initiatives. While investors will see somewhat watered-down returns, since these companies are already global giants, these stocks can be a less volatile way to garner needed foreign exposure.

Did you hear anything I said?
Of course, don't let that dissuade you from pursuing pure-play exposure to fast-growing foreign markets. These markets are growing for a reason, and companies operating solely in these countries stand to benefit the most. That's particularly true in China, where the government restricts just how much involvement foreign-owned firms can have in the domestic economy.

So if you're in the market for some more aggressive international stock ideas,  I encourage you to try our Motley Fool Global Gains international investing service. It's 100% devoted to finding superior international opportunities, and the team will help you navigate the tricky markets they find them in.

Thus far, our team's picks hail from around the globe, from China, Taiwan, and India all the way to Mexico. A free one-month guest pass to the service gives you full access to all buy reports, as well as the team's top five stocks for new money.

Fool contributor Joey Khattab owns shares of Diageo, a Motley Fool Income Investor recommendation. 3M is an Inside Value selection. The Fool has a disclosure policy.


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