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Consider Some Domestic Stocks Foreign Investments

Companies May Derive most of their Revenue from Overseas

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Investing in global or international stocks is a good way to diversify your portfolio and profit from other economies.

You have several choices when thinking about investing in the global economy:

  • International mutual funds
  • ADRs – Foreign stocks that trade on U.S. exchanges; explained in this article
  • Buy U.S. stocks that have large foreign presence
It is this last item that most investors overlook.

Thanks to globalization, many large U.S. companies now realize a significant percentage of their revenue from foreign markets.

If you own or buy Coca Cola stock (this is just an example), you are buying into a global corporation that derives a significant percentage of its revenues from countries other than the U.S.

Merck & Co., the pharmaceutical giant, does most of its business overseas and much of it in Europe. Some of the other big names that earn most of their revenues in foreign countries include:

  • Texas Instruments
  • Altria Group
  • Applied Materials
  • Exxon Mobil
  • Advanced Micro Devices
  • Colgate-Palmolive

Most consumer goods giants will have a significant portion of their sales overseas, along with health care technology and other related companies.

If you want to discover a particular company’s percentage of sales that come from foreign sources, you can find that information in its annual report.

There is a real benefit is investing in companies that are diversified across several or many economies.

They are more protected from slowing national economies in one area of the world.

Of course, there are risks. Over the years, U.S. companies have lost plants and facilities to hostile foreign countries when the politics turned against the U.S.

Companies with a large foreign exposure may also be subject to regional economic swings or currency issues. However, the move has been positive for most companies that have found U.S. markets either saturated or growing too slowly.

When considering a foreign investment, don’t overlook the domestic companies that, for all practical purposes, are foreign companies.

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