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One Stock That's Better Than Gold

http://www.fool.com/investing/international/2009/11/30/one-stock-thats-better-than-gold.aspx

Jim Mueller
November 30, 2009

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:

Company

Market Cap

Revenue (TTM)

% Revenue ex-U.S.

Philip Morris International (NYSE: PM  )

$95.2 billion

$60.3 billion

100%

Qualcomm (Nasdaq: QCOM  )

$75.1 billion

$10.4 billion

94%

NVIDIA (Nasdaq: NVDA  )

$7.1 billion

$3.4 billion

91%

Coca-Cola (NYSE: KO  )

$132.5 billion

$30.6 billion

73%*

Pfizer (NYSE: PFE  )

$147.2 billion

$45.8 billion

54%

Yum! Brands (NYSE: YUM  )

$16.6 billion

$10.8 billion

57%