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Tickers in this Article: UN, TEF, EWZ, EWM, UBS, LEH
Tuesday was great, wasn't it? We had a near-record rally for the Dow and participation from practically every stock and every group. And, it happened in the shadow of UBS AG's (NYSE:UBS) $19 billion in write-downs, which was celebrated with a 14.5% rally for the stock. Surely this must mean the beginning of the next bull market, right?

Well, I'm not buying it - figuratively or literally.

At some point stocks will have to reflect their fundamentals and actually justify their price tags. When we see a $19 billion write-down followed by Lehman Brothers' (NYSE:LEH) $4 billion, nearly forced, fund raising, it doesn't exactly scream to me that all the kinks are worked out here in the good ole' U.S.A.

Fortunately I've got a globe's worth of stocks to choose from, so I don't have to lose sleep over American equities just to get back into the market. I found two foreign companies, via American depository receipts (ADRs), that could smooth out a rough patch for even the most patriotic of investors. (If you're not sure how to invest in ADRs, read Investing Beyond Your Borders and our ADR Basics Tutorial.)

Staples Are Staples Everywhere You Go
Americans aren't the only folks who eat and bathe on a regular basis. The people running Unilever N.V. (NYSE:UN) are more than happy about that too. Unilever, a Netherlands-based company, is a processed food and personal care company and, judging by its results, it's a pretty good one. The trailing P/E ratio of 16.47 is probably not going to "wow" anybody, but I'll take a reliable stream of income any day in this environment, when growth stocks are under fire.

Unilever caught my eye a couple of days ago after filing the equivalent to an annual report (a 20-F) with the SEC. Sales grew 11%, from 47 billion in 2006 to 52 billion in 2007 and Deutsche Bank upped its opinion to a 'buy' from a 'hold' shortly afterward.

Sexy? Not in the least. That's the point.

People Are Talking
The last several months have not been particularly kind to telecom, in the United States or abroad. Spain's Telefonica SA (NYSE:TEF) hasn't been immune to the trend - a mistake that I see as an opportunity.

Telefonica's strength is its diversity. It's a mobile and fixed-line service provider, as well as an Internet/IPTV player. That's not where the bulk of their diversity lies though. Unlike most of its counterparts in other countries, Telefonica derives a major chunk of change from operations outside of Spain; about one-third of its sales originate in Latin America. It also has a significant interest in China's progress towards a 3G environment too. Point being, a lot of risk and revenue volatility has been circumvented.

The clincher may the company's recent announcement that it will "put its money where its mouth is" by buying back 100 million shares of its own stock over the next couple of years. If I had a company with a trailing PE of 10 and a return on equity of 48%, I'd be buying back stock, too. (For everything you need to know about the P/E ratio, check out our PE Ratio Tutorial.)

Final Thoughts
When I was a broker and recommended a decent dose of international exposure to my clients, the vast majority of the time the response was hesitation at best, and refusal at worst. The reason was usually the same: too much risk. The irony is that I heard this rationale the most in the middle of the 2000-2002 bear market, when American stocks were leading the implosion. Just for some perspective (and maybe a little bit of healthy regret), over the last twelve months the iShares MSCI Brazil ETF (PSE:EWZ) is up over 60%. For the twelve months before that, the iShares MSCI Malaysia ETF (PSE:EWM) led the way with a 47% gain. What was the S&P 500 during those times? Try -3.5% for the last twelve months, and it was only up 10% for the twelve months before that.

In my experience, a healthy dose of international exposure has actually reduced my overall volatility, and also enhanced total gains. I can't say that the two stocks mentioned above are the right answer for you, but they may be a good place to start.

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