As we await the launch of Motley Fool Global Gains, our new international investing service, we are taking a look back at some of our best international stock ideas. This article was originally published on May 24, 2006.

Whether you're content with the U.S. markets or drawn to the prospect of discovering the next international sensation, every investor should keep a keen eye toward the international markets. Why? Because adding overseas investing to your portfolio can be a boon to your overall returns. You can diversify your risks, exploit inefficiencies, and shop around for the best possible long-term returns for your investment dollar.

Seeing what has happened in the past in other countries in the wake of housing bubbles (or booms, if you prefer) gives me some concerns about consumer spending in the next few years. And while General Motors' (NYSE:GM) problems go way beyond the state of the average American's finances, why not look at a better performer like Toyota (NYSE:TM) or Porsche?

The reasons to go overseas are still valid
Let's also not forget that never-ending worries about interest rates or oil prices don't change some of the most appealing long-term aspects of many overseas markets. As per capita incomes rise, more goods and services become accessible and demanded by more people. Want to find the Google (NASDAQ:GOOG) of China? Who doesn't?

At the risk of oversimplification, it's fair to say that foreigners like the Chinese have been financing a lot of our spending. That means they have the money to invest in R&D, infrastructure, new businesses, and more consumption in general. And if the local folks are getting more wealthy, it stands to reason that the local companies will share in some of that wealth. I'm not saying that it's over for an American company like Citigroup (NYSE:C), but just consider the growth potential, even accounting for ups and downs, of Indian banks like ICICI Bank (NYSE:IBN) or HDFC Bank (NYSE:HDB).

Another perk to overseas investing is the valuations. For a variety of reasons, including the way some markets come into and out of favor, you can often find at least a few markets trading at general valuations below what you find in the States. And with emerging markets coming under a lot of fire recently, you can buy into strong companies with a better margin of safety.

Don't be afraid to take advantage of these great opportunities, which are often a product of ignorance and fear. Individual investing is not as common or popular in other countries as it is here, and that means there are fewer investing dollars chasing those local companies. That's also true on the professional stage -- there are ample numbers of professional international investors, but it's still largely true that an American fund manager is more comfortable losing money on Wal-Mart (NYSE:WMT) than on Carrefour or Hennes& Mauritz.

Avoid the fads; go with the winners
The herd instinct is a powerful force in investing, and that's just as true with international investing. And if you choose to run with the dogs, you have to look out for fleas.

You can see markets go into bubbles, just as we saw here a few years back. Our antidote is simple -- look for great companies, and wait for them to trade at good, or even great, valuations. Sometimes, that means you have to wait for overpriced stocks to come to you, and sometimes it means you have to buy cheap stocks and just wait patiently for the market to come to its senses. But when it happens, it's a great feeling.

Wal-Mart is a Motley Fool Inside Value recommendation. To find other companies that are trading at great prices, try the newsletter free for 30 days.

Foolish research associate Katrina Chan updated this article, which was originally written by Stephen Simpson. Katrina has no interest in any stocks mentioned. The Motley Fool has an internationally accepted disclosure policy .