The importance of foreign sales to U.S. companies is making stock investors study even harder before investing.
Most large companies and many smaller firms view foreign markets (think Europe and China, in particular) as prime growth areas.
Alcoa Aluminium, which is one of the Dow components, reported that is fiscal year 2009 48 percent of its sales were not in the United States.
In some cases, Coca Cola, for example, the majority of its sales revenue comes from outside the U.S.
Companies aren't just exporting more, they often build facilities overseas to serve local customers.
What does this mean to investors? A couple of things:
- Companies with a large presence overseas may be buffered when the domestic economy and/or stock markets falter.
- Likewise, companies with a large presence overseas may face difficulties when foreign economies falter.
Investors will need a good picture of what opportunities and risks companies face with a large overseas presence.
Finding this information isn't easy.
Many companies don't fully report this exposure and, if they do, it is often buried in the annual report.
Still, if you want to truly assess a company's prospects, you need to know what risks and opportunities it faces at home and abroad.
