Many methods exist to help you diversify your overall portfolio. One way to increase your international exposure and participate in profits abroad is through foreign-owned stocks or ADRs (American depositary receipts). In many rapidly growing developing countries, a lack of transparency and a dearth of regulations make it difficult to ensure the legitimacy of companies you're interested in. Furthermore, issues related to trade execution and currency conversion can make the process of purchasing foreign stocks problematic. But buying ADRs of foreign-owned companies that trade on major stock exchanges in U.S. dollars is a good solution. These companies would have had to meet tough listing and transparency standards in order to be accepted onto a major exchange. Therefore, the information you learn about these stocks is probably reliable. (To learn more about ADRs, read ADR Basics: What Is An ADR?.)

Some good companies to consider for international exposure include: Telefonica S.A. (NYSE:TEF), Aluminum Corp. of China (NYSE:ACH) and Suncor Energy (NYSE:SU).

Telefonica Shows Promise
Telefonica looks very attractive from a valuation standpoint. The company has a forward P/E ratio of 9 and a market cap of approximately $103 billion. This is one of the best investment ideas for those seeking exposure to the telecommunications industry in Spain, Europe and Latin America. Over the long-term, it would not be surprising to see profits increase, given Telefonica's sizable market position. For investors interested in long-term international growth, Telefonica is worth a second look.

Aluminum Corp. of China Shines
Whether or not the world cares to admit it, China will continue to be a great long-term growth story, even if the country experiences an eventual slow down in the short-term. Aluminum Corp. of China is a great way to get involved in Chinese expansion. For long-term investors seeking to gain exposure in Chinese growth, this could prove to be a great time to get involved. Shares may be volatile over the short-term, but Aluminum Corp. of China should have future staying power. Smart investors who purchased shares in Aluminum Corp. of China during the period of market weakness should reap future rewards.

Suncor: Attractive Valuation
Shares of Suncor Energy are attractive from a valuation standpoint. The company has a forward P/E of 10 and is trading with a 1.60 price to book ratio. The strengthening oil and gas sector and last year's acquisition of Petro Canada has provided investors a good reason to give this stock a second look.

Bottom Line
For investors who want to diversify their portfolios by participating in the long-term growth some international countries are seeing, ADRs are a liquid, more transparent, and easy way to get involved. However, investing in ADRs requires that you look beyond the current challenges plaguing the world economy. If you are patient and willing to ride out the ups and downs, ADRs are a great way to diversify your overall portfolio long-term. (By investing globally and trading locally, American depositary receipts offer the best of both worlds. To learn more, read ADRs: Invest Offshore Without Leaving Home.)

Related Articles
  1. Stock Analysis

    Will WYNN Continue to Rally?

    Wynn Resorts has experienced a rally recently. Will it remain a good bet?
  2. Stock Analysis

    Don't Be Fooled by the Market's Recent Rally

    The bulls won for a bit in early October, but will bears have the last laugh?
  3. Stock Analysis

    Will Twitter's Stock Find its Wings Soon?

    Twitter is an enigma to many investors, but its story is pretty straightforward.
  4. Stock Analysis

    8 Solid Utility Stocks for a Bear Market

    If you're seeking modest appreciation, generous dividend payments and resiliency, consider these eight utility stocks.
  5. Stock Analysis

    Why Phillips 66 (PSX) is a Solid Long-Term Bet

    Here's why Phillips 66 will likely remain one of the world’s largest and most profitable companies for a long time to come.
  6. Stock Analysis

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  7. Economics

    Keep an Eye on These Emerging Economies

    Emerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
  8. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  9. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  10. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!