Drinking Pepsi in the Khyber Pass

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On a recent trip to Afghanistan, my wife took a daytrip through the Khyber Pass to see relatives in Pakistan. Though she travelled through one of the most remote places on earth, she saw constant reminders of home. She stopped at a Pepsi-emblazoned kiosk, purchased Lay's potato chips, and drank Nestle chocolate milk.

When she shared this experience with me, I couldn't have been happier. While this may smack of imperialism, I think this type of expansion is the only way American companies can escape the United States' current economic malaise. Going abroad is no longer optional, and in this second part of my series on international investing, I'll share with you the seven companies best-positioned to do so.

Global brand recognition
Coca-Cola
(NYS: KO) and PepsiCo (NYS: PEP) are the standard-bearers of global economic expansion. Coca-Cola is the world's best-known brand, with PepsiCo slightly further down the list. Thanks to Coke's brand power and global distribution system, the average person in Kenya drinks 40 servings of Coke each year. In Mexico, per capita consumption reaches 675 servings! Indeed, more than 65% and 47% of Coca-Cola and PepsiCo's respective revenues now come from abroad. This global presence makes these companies great long-term investments.

McDonald's (NYS: MCD) follows closely behind. Every day, McDonald's serves 47 million customers in 119 countries. The only continent it doesn't bless with Big Macs is Antarctica. But few investors may realize that McDonald's takes in twice as much revenue abroad as it does in the U.S. That disparity could be just the beginning when you consider the opportunities in China, where the company plans to open as many as 10,000 more restaurants in the future.

Yum! Brands (NYS: YUM) , the washed-up domestic has-been behind KFC, Taco Bell, and Pizza Hut, is seeing similar results abroad. Of all American companies, it is arguably the most effective at appealing to China's rising consumer class. Just last quarter, Yum! opened 99 new restaurants in the world's most populous nation, and increased same-store sales there by a staggering 18%.

Consumer-products companies like Procter & Gamble (NYS: PG) , Colgate-Palmolive (NYS: CL) , and Kimberly-Clark (NYS: KMB) are less obvious but similarly relevant candidates. While these companies endure lackluster growth at home, many are experiencing double-digit gains abroad. In its most recent earnings release, Kimberly-Clark's personal-care segment reported a 2% decrease in North American sales, but 19% sales increase in Asia, Latin America, the Middle East, Eastern Europe, and Africa. That expansion isn't surprising when you consider that growing incomes in China and India have created a billion new Asian customers for companies like these.

Can you buy it in the Khyber Pass?
While it hurts my heart to say this, North America is no longer the poster child of economic growth. With markets the size of China and India opening up to global commerce, it's not enough nowadays to dominate in the U.S. Fools should adopt this general rule going forward: Companies you hold for the long term must have either a presence in these markets, or a feasible and imminent strategy to establish one.

Feel free to leave questions or comments in the space below. And to keep track of these companies as they spread to every corner of the map, consider adding them to your Fool watchlist:

At the time this article was published The Motley Fool owns shares of Coca-Cola, PepsiCo, and Yum! Brands.Motley Fool newsletter serviceshave recommended buying shares of Coca-Cola, Procter & Gamble, McDonald's, Yum! Brands, PepsiCo, and Kimberly Clark, and creating a diagonal call position in PepsiCo. Try any of our Foolish newsletter servicesfree for 30 days.As of this writing, Fool contributor John Maxfield does not own shares of any company mentioned in this article. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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