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One Stock That's Better Than Gold

My colleagues Tim Hanson and Brian Richards have done their best to scare you about a falling dollar. And with the articles behind headlines like "Get Out Now!" and "Read This Because the Dollar Is Doomed," they've made their point.

Of course with other headlines in the financial press, ones like "Dollar on Weak Footing" and "U.S. Dollar's Queasy Slide," it's no wonder people are concerned. And the anxiety ramps up when you consider that the U.S. government has been printing greenbacks at a tremendous rate, both to bail out otherwise-worthless companies and to stimulate the economy. That's got to be inflationary at some point.

Supporting this, luminaries such as bond master Bill Gross, Swiss banker Konrad Hummler, and commodities expert Jim Rogers have all expressed concern about the dollar.

Cue the infomercials
In reaction, many would have you invest in gold, which, of course, has seen a huge price run-up. After all, gold is supposedly "safe." But when you see ads on TV urging you to convert your jewelry and other sources of gold -- dental fillings? really? -- into cash, doesn't that point to a possible bubble in gold prices? I mean, isn't that similar to shows on how to buy and flip houses during the inflating of the real estate bubble?

Yes, gold is considered safe, but is buying into a frothy gold market really the best way to protect your dollars? After all, gold doesn't grow earnings or pay you a dividend while owning it.

There are other ways to protect your portfolio against a falling dollar -- ways that need not be driven by fear. Unless you want to get into the intricacies of foreign exchange trading, the answer is pretty simple. Invest in companies that generate a large part of their revenue overseas. That's because as the dollar falls, those foreign revenues are converted into more dollars. Your investment will grow from both increasing sales and higher conversion rates.

A better hedge
Consider the following companies, each of which generates at least half of its revenue outside of the United States:


Market Cap

Revenue (TTM)

% Revenue ex-U.S.

Philip Morris International (NYSE: PM  )

$95.2 billion

$60.3 billion


Qualcomm (Nasdaq: QCOM  )

$75.1 billion

$10.4 billion


NVIDIA (Nasdaq: NVDA  )

$7.1 billion

$3.4 billion


Coca-Cola (NYSE: KO  )

$132.5 billion

$30.6 billion


Pfizer (NYSE: PFE  )

$147.2 billion

$45.8 billion


Yum! Brands (NYSE: YUM  )

$16.6 billion

$10.8 billion


Google (Nasdaq: GOOG  )

$183.9 billion

$22.7 billion


Source: Capital IQ, a division of Standard & Poor's. TTM = Trailing 12 months.
*Ex-North America.

None of those are surprises, really. Yum! Brands is growing quickly in China, pharmaceutical companies sell their drugs all over the world, and Coke is just about the biggest brand on the planet. Even Google generates most of its ad revenue outside these shores.

But the one company on that list that I believe would do the best at hedging your dollar risk is the one that doesn't bring in a penny here in the states: Philip Morris. It has the leading market share, the No. 1 brand, and pays a very respectable dividend of 4.7%.

Sure, gold can be used to preserve your dollars, but only if you get in at the right point. Right now, however, I'd be worried about buying too high, especially given the speed of its rise in price. Investing in a company with a majority of its revenue and earnings overseas, however, also protects you against a falling dollar. And you have the opportunity to participate in its further growth, plus you often get a dividend. That's better than gold, which, in my mind, other than relying on nervous people to bid up its price, doesn't do much to grow its value.

Of course, Philip Morris might not be your cup of tea. That's OK, there are plenty of other internationally focused companies growing earnings and value. Each month, Motley Fool Global Gains brings you two of them. If you're serious about divesting away from the risk of being all-in with the dollar, and looking for something other than gold, consider a free 30-day trial. There's no obligation, and you get to see the team's best stock ideas. Simply click here to read all about them.

Jim Mueller owns shares of Philip Morris and Coke, but no other company mentioned in this article. Google is a Rule Breakers selection. NVIDIA is a Stock Advisor pick. Coke and Pfizer are Inside Value recommendations, and Coke is also an Income Investor pick. Philip Morris is a Global Gains recommendation. The Fool's disclosure policy may glitter like gold on the surface, but underneath, it's pure ... mostly.

Read/Post Comments (2) | Recommend This Article (50)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 06, 2009, at 5:03 AM, knadgir wrote:

    Isn't Philip Morris the big tobacco company? Being a responsible individual, I would have a problem of ethics recommending or buying this stock. Is there a reason I shouldn't?

  • Report this Comment On December 12, 2009, at 6:17 PM, johnhenr wrote:

    This site is about making money. If someone wants to indulge in smoking, drinking or other possibly unhealthy activities, that is there choice. If purchasing shares in this company will make me money, so much the better. Being a responsible adult, I choose to allow other adults to make decisions about how to live their lives.

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