U.S. Giants Expanding Their Reach in Brazil

 As a result of big growth in the last ten years, a surprising large part of the sales and profits of the biggest U.S. companies now come from markets outside of the U.S. David Bianco, head of U.S. stock strategy at Bank of America Merrill Lynch Global Research, says that earnings in 2010 will be affected by the world economy more than the U.S. He thinks that 40% of the direct profits of the 500 companies in the Standard & Poor's index come from countries other than the United States. This is twice as much as it was 10 years ago. The trend is expected to keep going, which will help Corporate America do better. Look at what happened last year: The foreign sales of the 500 businesses that make up the Standard & Poor's list went up by almost 9%, but their domestic sales went down by 0.3% during the economic crises. According to Bianco, foreign contributions could help the S&P 500 rise by 15%, to 1275. This is what he bases his 2010 market view on. "The S&P is outgrowing the U.S. economy, owing to these pioneering U.S. emigrants," he adds. The index has gone up 22% so far this year, while the MSCI emerging-market index has gone up 65%.

In contrast to the U.S.

Which is still having trouble getting back to 3% growth, developing market economies have been on fire. Win Thin, a senior currency strategist at Brown Brothers Harriman, says that new figures show that most emerging-market countries' GDP growth rates are "poised to surge" in the fourth quarter and into 2010. He said that Taiwan's exports went up 29% in November and Chile's went up 26%. As countries outside of the U.S. grow, some people believe that Asia will pass the U.S. in a few decades. Based on the World Bank, the U.S. economy will only make up 24% of the world's total by 2030. Asia's share, which is now the same as the U.S. at 28%, will rise to 55%. Big American companies have made about half of their income from outside of the US so far in Europe and Japan. But emerging countries are where they're seeing the most growth. Emerging economies are going to grow twice as fast as developed economies over the next two years. Bianco likes sectors like energy, technology, industrials, and materials because emerging countries need a lot of infrastructure and goods. Apache (ticker: APA), a company that looks for and produces oil, gets about 60% of its income and 65% of its profits from outside of the United States. Shares of this company trade below those of its major competitors because their price-to-earnings ratio is 9.9. Another fan, Fred Fraenkel, is head of investment policy at New Jersey-based Beacon Trust. He says that the company plans to send a lot of a new Canadian find to Asia. Keith Fitz-Gerald, chief financial strategist at Money Map Press and author of Fiscal Hangover, says, "The world's demand will make sure that energy companies continue to make money no matter what the price of oil is." He says that China's oil supplies are rising by 12% a year, which means that in less than 10 years, China's oil use will reach the level of the U.S. Kinder Morgan Energy Partners (KMP), a distribution company with big consulting jobs in China and other growing countries, is one of the energy and infrastructure plays he likes.

The infrastructure build-out could be good for Caterpillar (CAT)

Since 66% of its sales and almost half of its profits come from outside of the United States, says Fraenkel. This year, the stock has done better than the S&P, rising 27.5% to $56.94.

Countries like China, India, and Brazil no longer just send things to other countries. They are very close to becoming "net demanders of stuff," as Fraenkel puts it. As an example, Daimler (DAI) sent 8,700 cars to China in November, which is almost three times as many as it sent in November 2008. Fraenkel likes companies like Qualcomm (QCOM), which makes integrated circuit technology used in cell phones, because more people are buying things in emerging countries. It's trading for only 20 times what it's expected to earn next year, which is a lot less than its average of 27 in the past. He says that a growing middle class is also good for Nike (NKE), Yum! Brands (YUM), and McDonald's (MCD). All of them get more than half of their sales from outside of their own country. The prices of Yum! and McDonald's are both 14 times earnings, which is a lot less than the long-term average of 17. There are risks to dealing in other countries through the back door. Higher interest rates in the U.S., a big drop in the value of the dollar, and stricter corporate taxes could all hurt the income of U.S. companies that do business abroad, says Bianco. But for now, U.S. companies will keep growing in other countries. Investors might want to get on board for the ride. The Patriots' name has taken a big step toward going global since Brazil was added as their newest global territory. The NFL said that its Global Markets Program would expand to five new markets in 2024. The Patriots added Brazil to their list of markets. The Patriots said adding Brazil "will allow the Patriots opportunities for in-person and digital marketing, corporate sponsorship sales, fan events, activations, merchandise sales and co-marketing relationships with other sports and entertainment properties in Brazil."

These rights had already been given to the Patriots in Germany, Austria, and Switzerland

"Our organization has been committed to expanding our reach and our brand globally since we bought the team in 1994," Kraft said. "The internet and social media have helped us reach millions of fans all over the world. We're proud to have played regular-season games in the UK, Mexico, and Germany." Since the NFL's Global Markets Program was created, we've been able to show an even stronger commitment to building better relationships in other countries by giving us more rights to market both our team and the great game of American football.