The Best Stocks for Global Domination

Economic prospects throughout the world look a lot better than they do in the U.S. right now. Regardless of when and how strongly the domestic economy rebounds, you need stocks that will win the global fight for world economic domination.

The recession's over?
Technically speaking, it's tough to dispute that the economy has been growing slowly since mid-2009. Yet with the country's gross domestic product still well beneath its former peak, it certainly doesn't feel like a recovery -- especially when you compare half-hearted growth in the U.S. with the more robust rebound enjoyed by economies elsewhere in the world. And with growth in jobs still hard to come by, it's tough to predict when a real recovery will reach home to the American public.

With that gloomy backdrop, you can't blame investors for looking for growth from international stocks. But you don't have to travel beyond the nation's shores to find stocks that will benefit from strong growth in foreign markets.

The coming consumer revolution
International expert Tim Hanson recently pointed out that when most people think of emerging-market stocks, they focus on the wrong ones. Huge, government-controlled entities with equally massive market caps aren't well-positioned to take advantage of the explosive growth that a growing consumer class in China, India, and Brazil will create in the years and decades to come. Yet some of the favorite emerging-market investments focus on exactly these companies: shares of banks, natural resources companies, and other industrial stalwarts that have already enjoyed tremendous growth.

Tim argues that rather than picking those big powerhouse stocks, you should instead focus on lesser-known consumer-oriented emerging-market companies that will cater to a growing middle-class in these countries. That's a reasonable approach. But even with the money you want to keep invested in the U.S., you can find plenty of ways to cash in on the improving financial condition of emerging-market consumers.

Focus on brand
More than any other country in the world, the U.S. has companies with big investments in their brands. Companies spend billions of dollars creating, promoting, and building their brand awareness, all in the hope that it will bring future dividends in the form of ongoing sales and customer loyalty.

One of the U.S.'s most valuable exports is its cultural influence on the rest of the world. That influence means that brands don't just bring revenue in the U.S.; they also support expansion throughout the world, especially when rising standards of living make it possible for vast populations to move beyond subsistence goods to buy status items.

Some of the top-branded consumer stocks already have a huge presence abroad. Consider the following:

Sources: Interbrand and Capital IQ, a division of Standard and Poor's.

These are all well-known stocks to U.S. investors. Yet you can see just how important international consumers are to these companies and their financial results. Despite having strong roots at home, many consumer companies now get more of their revenue from abroad than from U.S. customers. And even those companies that don't, such as Disney and Apple, have strong brand awareness abroad -- an asset that smart management will build on as a theme for future global growth for those industry leaders.

Don't leave home without them
Having international stocks in your portfolio makes a lot of sense, both for the diversification they give you and the opportunities for growth. But if you want to take advantage of growth in foreign economies, don't feel like you have to give up on U.S. stocks. Many U.S. companies are in a perfect position to benefit from the rising fortunes of people around the world, no matter where they happen to call home.

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