Thursday, April 22, 2010

8 US Stocks With International Exposure.

Investment pros recommend that US based investors should have anywhere from 20-45% of their stock holdings in foreign companies. It's not the geographic location of the company that's important to the asset allocation, but the diversification of economies.

This is because foreign economies usually do not move in parallel with the US economy, but that has lessened over the years as the world has become more connected and less diverse.

In fact, the shrinking world has become so small (economically speaking) that you don't even have to buy stock in foreign companies to benefit from a foreign economy. Here are 8 US based companies that benefit strongly from overseas sales.

Coca-Cola (KO).

It has long been known that Coca-Cola sells more soft drinks overseas than at home, and it's also one of Warren Buffet's darling stocks. The company recently reported sagging sales in North America, but still increased it's income by 69 cents per share.

Caterpillar (CAT).

Caterpillar exports more big (I mean, huge - 400 ton!) mining trucks than it sells in the US. It makes sense when you consider all the places in the world that have yet to be developed.

Colgate-Palmolive (CL).

Colgate-Palmolive is your quintessential medicine cabinet stock. They're the maker of toothpaste, mouthwash, dental floss, pharmaceutical products for dentists, deodorant, detergents, etc. They also sell more of these products in Latin America than in the US.

Estee Lauder Cos (EL).

Estee Lauder is the maker of makeup brands Clinique and M.A.C. and they're tapping into the growing Chinese middle class and have a solid hold in Japan. They also have higher profit margins in Asia than in the US.

Baxter International (BAX).

Baxter makes medical supply and health care products. It derives about 60% of its revenue from non-US sales, with most of it being from Europe. They are also branching out into emerging markets as well.

Expeditors International of Washington Inc. (EXPD)

Expeditors is one of the world's largest freight forwarders. Expeditors doesn't own planes, trains or ships because it serves as a kind of travel agent for the cargo that rides on other company's planes, trains and ships. They handle the logistics of shipping, and derive 80% of their sales from overseas and 60% of that from the BRIC counties.

Marvell Technology (MRVL).

After laying off 15% of its workforce and losing nearly all of its sales during the recession, Marvell saw its profit jump to more than the previous two years combined and its sales have risen 10%. Marvell is in the semiconductor business and that's a global growth business.

Illinois Tool Works (ITW).

Illinois Tool Works makes products for everything from cars to computers to six-packs! (they make those plastic rings that hold the cans together.) Illinois Tool Works gets almost 58% of their revenue from overseas - mainly China and India.

As you can see, there are a number of blue chip US companies that allow the investor to gain exposure to various slices of the global economy. Want some of the gains from Latin America? Check out Estee Lauder. Interested in some exposure to China, but don't want to worry about investing in a shady foreign fund? Look into Illinois Tool Works. It's a good way to invest in America, but hedge your bets on global growth.



Post a Comment