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Many investors like the idea of diversifying their portfolios worldwide but are hesitant to own non-U.S. stocks. They cite concerns about financial disclosures not being of the same quality as U.S. companies, as well as worries about the possible nationalization of the businesses.
Fortunately, there is a way to make foreign investments while buying only companies based in the U.S. This can be done by investing in companies that receive a significant amount of revenue from foreign countries. And this strategy can be applied to stocks in various sectors.
There are several portfolios on Stockpickr that list and analyze stocks that trade in the U.S. but have the highest exposure to foreign sales. Here's a sampling:
Let's take a closer look at few stocks that offer worldwide exposure without the risk associated with non-U.S. stocks.
First up is the largest American conglomerate,
. The company is involved in everything from jet engines to MRI machines to loans to television broadcasting. It also has one of the highest percentages of revenue from foreign countries. About 87% of General Electric's revenue comes from non-U.S. sources, primarily from Europe and the Pacific Basin. Company exports from the U.S. were up 30% over the previous year.
In the financial sector, there is
American International Group
. This name is an international leader in insurance and financial services, and about 39% of its revenue comes from non-U.S. business. This includes 24% of general insurance revenue, as well as 66% of life insurance and retirement services revenue.
Take a look at
, which is the largest company in the world in terms of profits and market value. It is the second-largest in terms of sales, after
. Approximately 69% of its sales come from foreign countries, with the primary revenue sources being Japan, Canada, the United Kingdom, Germany, Belgium, Italy and France.
Exxon Mobil is also first on Stockpickr user BamBam's
list , made up of companies that have the highest return on capital and lowest P/E ratios. Other stocks on the list include
, in the technology and Internet sector. It has a surprising amount of non-U.S. income; 43% of its revenue comes from outside the United States, with the largest portion of foreign income coming from the United Kingdom.
In the health care sector, there is
. The company is one of the largest pharmaceutical manufacturers in the world. It also distributes products worldwide, with 46% of its revenue coming from foreign sources.
Finally, to round out the list, take a look at consumer goods name
. Coca-Cola is one of the most popular and most recognized brand names in the world. And the world outside the U.S. provides 49% of its revenue.
On a related note, I'm also intrigued by the Quant Foreign Value fund, whose manager, Bernard Horn Jr., was selected by MarketWatch as the mutual fund manager of the year for 2006. The fund has a five-year annualized return of 22%, and it was up 23% last year. You can see the top holdings of the
on Stockpickr. I like this fund's approach, which is described in detail on its Web site:
The Fund will generally own stocks of 30 to 60 non-U.S. companies located in the countries comprising the Morgan Stanley Europe, Australasia and Far East (MSCI EAFE) Index. In addition, the Fund may also invest a portion of its assets in emerging markets. The diversification within the Fund, coupled with the fact that the operation of the Fund's investment model will generally lead the Fund to be invested in 10 or more countries, reduces the likelihood that negative performance of a single country will significantly impact the Fund's return.
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At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time
James Altucher is president of Stockpickr LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
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