BOSTON (TheStreet) -- International revenue growth for big U.S. companies such as Johnson & Johnson (JNJ) and PepsiCo (PEP) is the one saving grace as the domestic economy grinds to a halt. Too bad the benefit of currency swings masks the real story.U.S. large-cap companies are finding more opportunities in emerging markets. In previous quarters, the weakness in the dollar has made it cheaper for foreign countries to buy consumers goods from U.S. corporations. That resulted in American companies producing faster sales growth overseas.
¿ IBM ( IBM) said it saw revenue in Europe, Middle East and Africa climb 9%, although that was flat when adjusting for currencies. Revenue growth of 10% in the Asia-Pacific region was only 1% when adjusted. By comparison, U.S. revenue growth was up an adjusted 6%. ¿ Coca-Cola ( KO) reported a 45% surge in revenue from a year earlier, although the company benefitted from currencies as well as the acquisition of Coca-Cola Enterprises. As it turns out, the company had organic growth of only 1% in North America during the third quarter, and volume growth in Europe was essentially flat. Reported European net revenue for the quarter grew 5%, but that included a 6% currency benefit. ¿ Johnson & Johnson ( JNJ) saw U.S. revenue drop 3.7% from a year earlier while international sales jumped 16.4%. However, only 8.3% of the international sales increase was due to operations, with the other 8.1% coming from currency benefits. ¿ PepsiCo ( PEP) said net revenue in Europe jumped 37%, although that was partly driven by the company's acquisition of Russian dairy and juice company Wimm-Bill-Dann. Meanwhile, much of the company's net revenue growth in its Americas segment came thanks to Latin America, where food revenue jumped 19%. ¿ Parker Hannifin's ( PH) headlines lauded a 14% increase in sales to notch a first-quarter record of $3.2 billion. While organic sales growth was a strong 10%, foreign currency translation accounted for 3% of the total.Paul Nolte, director of investments with Dearborn Partners, says it would be overstating it by saying that international sales growth is a mirage caused by the stronger dollar, but he agrees that it is a big headwind for these large-cap U.S. companies going forward. "We'll see that persistence through this earnings season and into the fourth quarter," Nolte says. "Companies already have to increase their costs to increase their overseas businesses. When you tack on to that a higher dollar, it's creating more of a headwind. The international operations are still good, but not with a higher dollar. We're starting to see some of the effects now." For investors who have been pitched the investment case that large cap U.S. equities are the place to be, these early trends are concerning. Nolte agrees, though he says there are "reasons to hold them," notably that they're the "best defensive names." Still, "you're losing some of the benefit because of the higher dollar." So for those keeping track at home, multinational U.S. companies can't find growth in the U.S., so they hunt for it overseas. Unfortunately, the mix of costs to expand businesses and the higher dollar could dent profitability. And yet, this is one of the most attractive asset classes currently. No wonder investors want nothing to do with the stock market. -- Written by Robert Holmes in Boston. >To contact the writer of this article, click here: Robert Holmes. >To follow Robert Holmes on Twitter, go to http://twitter.com/RobTheStreet. >To submit a news tip, send an email to: firstname.lastname@example.org.