(MONEY Magazine) – Investors who prefer individual equities to mutual funds can find foreign markets vexing. Unless you're willing to take on the inconvenience, added expense and increased risk of buying stocks on foreign exchanges, you're limited to the 300 or so mostly large foreign firms whose shares are listed on U.S. exchanges as American Depositary Receipts (ADRs). And even ADRs have drawbacks -- foreign tax complications, for example, and sometimes a shortage of data on the underlying companies. But you can profit from the fast economic growth taking place around the world without venturing near these unfamiliar securities. The trick: Invest in U.S. companies whose fortunes are hitched to exports or to major overseas operations. "You get global growth opportunities with the relative comfort and safety of U.S. stocks," says Joseph Battipaglia, chief investment strategist for Gruntal & Co. in New York City. To find attractive U.S. companies whose foreign businesses should power strong stock gains over the next year, we started by asking Standard & Poor's Compustat research division in Englewood, Colo. to cull its database of 8,900 U.S. enterprises for those with $500 million or more in total revenues, at least 20% of sales overseas and a " buy" rating from the S&P's Analysts' Consensus Estimates (ACE) database. With a list of 99 such firms in hand, we canvassed more than three dozen securities analysts and money managers around the country and identified 10 companies whose excellent prospects for shareholder profits hinge largely on their foreign operations. All are leaders in their industries, with solid balance sheets and as much as 68% of their revenues generated abroad. Though many are near historic highs, even after the market rout in late March, they offer the chance at further price increases of as much as 63% over the next year. Here are our tantalizing 10, ranked by their projected 12-month gains: - Ford (ticker symbol: F; recently traded on the New York Stock Exchange at $61.25; 2.6% dividend yield). As recently as 1989, European operations generated $3 billion in profits for Ford, which got 30% of its $108.5 billion in sales from overseas last year. But plagued by the Continent's pesky 36- month recession, the automaker lost half a billion dollars in Europe in 1993. At the same time, however, it sliced $1.5 billion in expenses from its European operations. Therefore, as the Euro-recession ends, Kidder Peabody analyst Michael Ward expects Ford to see pretax profits of $1 billion from car and truck sales there next year. Ford's stock recently hit an all-time high. But at 12.3 times estimated 1994 earnings per share, it's roughly in line with the rest of the U.S. auto industry. Combining continued strong U.S. sales with the rejuvenation in Europe, Ward believes Ford will register a 63% stock gain and be trading at $100 by next May. Caterpillar (CAT; NYSE, $116.75; 0.5%). The world's largest producer of earth-moving gear saw its international sales (48% of the total) crawl ahead by a mere 2% in 1993, weighted down by sluggish Europe. But Smith Barney analyst Tobias Levkovich thinks that the relentless pace of development in China and Vietnam and other emerging markets -- where $11.6 billion Caterpillar already generates 30% of sales -- will help to boost recurring earnings by 86% this year to $650 million. "Gordon Wu uses only Caterpillar machines," says Levkovich, referring to the Hong Kong tycoon who is developing a $1 billion superhighway and six power plants in China. Levkovich thinks that such brand-name respect will propel an earnings increase of 30% in 1995, when Europe's recovery will hit Cat's bottom line. Though Caterpillar's share price is near historic highs, its P/E ratio of 23.4 is lower than it was earlier in this decade, when the stock traded at more than 25 times earnings. Levkovich has a target price of $150 by next May, for a gain of 28%. Mattel (MAT; NYSE, $25.75; 0.9%). Don't talk to the nation's second largest toymaker about a slump in Europe. With Barbie leading the charge, $2.7 billion Mattel posted healthy 1993 sales increases in most of its European markets. Mattel's acquisition last year of infant/preschool toymaker Fisher-Price should help it sustain that upward trend. Mattel can use its marketing muscle to increase Fisher's presence in foreign outlets; Fisher had been getting only 25% of its $750 million revenues from abroad, vs. about 50% for Mattel. And with a similar strategy in mind, Mattel in March said it planned to acquire $175 million Kransco, maker of Hula Hoops. Another plus this year: Mattel, of El Segundo, Calif., will begin selling its wares in Argentina, China, Portugal and Venezuela. After entering the Mexican market in 1981, for example, Mattel saw its 1993 sales there jump by 60% to $90 million. Little wonder that Mattel's stock has been climbing over the past five years, though its 16.6 P/E ratio is lower than 1993's 20.6 multiple. Janet DeFrino, who is an analyst at Morgan Stanley, projects that a 36% rise in earnings this year will bounce Mattel shares 28% to $33 in 12 months. Beckman Instruments (BEC; NYSE, $27.5; 1.5%). Last year, this $876 million Fullerton, Calif. lab instrument manufacturer made a strategic decision to shift its product and marketing emphasis from universities to companies in fast-growing clinical diagnostics and biotechnology research. Thanks to that move, says Prudential Securities analyst Harry Zisson, Beckman is well positioned to cash in when the recovery takes hold in Europe, which accounts for 35% of the company's sales (another 16% comes from other foreign markets). Zisson projects 10% to 12% annual earnings growth for Beckman over the next five years, and he expects the company's stock -- whose price-to-earnings ratio of 14.5 is below the 18.8 industry average -- will increase 27% by next May, reaching $35. Vishay Intertechnology (VSH; NYSE, $39.25; 4.1%). The No. 1 supplier of resistors, circuit boards and other passive electronic devices for the computer, aerospace and telecommunications industries, $856 million Vishay saw profits jump 22% from 1992 to 1993. The Malvern, Pa. company achieved that gain despite slack demand in Europe, where it generates most of its 59% in foreign revenues. Alex. Brown & Sons analyst John Marren thinks the company's European sales will jump as much as 20% in early 1995 as the Continent's economies revive. By next summer, Marren expects Vishay shares -- now selling at 15.7 times earnings, in line with the 15.5 industry average -- to hit $50, for a 27% price gain. American International Group (AIG; NYSE, $83.75; 0.5%). A longstanding strategy of entering developing countries early has paid off for this premier global life and property/casualty insurer (1993 net premiums written: $10 billion). AIG, with headquarters in New York City, earns nearly half its $20 billion in total revenues from 130 countries outside the U.S., notably Japan and the U.K., and enjoys market-leading positions in many of the fastest- growing regions of the world. In China, for example, AIG is the only licensed foreign insurer and plans to double its 500-strong agent force this year. Such dominance allows AIG to command top prices for its policies, making its foreign operations more profitable than its U.S. underwriting. A.G. Edwards & Sons analyst Jeffrey Hopson expects these overseas businesses to power 15% annual earnings growth for the company over the next five years. He thinks AIG's stock, which is trading in the middle of its historical range at 12.9 times estimated 1994 earnings, will expand 23% to $103 within a year. Duracell International (DUR; NYSE, $41.75; 2.1%). With almost half its sales generated overseas, this $1.7 billion Bethel, Conn. battery maker is already benefiting from the developing world's growing appetite for battery-powered consumer goodies like portable tape players and hand-held video games, says Roger Engemann, manager of the Pasadena Nifty Fifty Fund. For example, in the quarter that ended Dec. 31, Duracell's non-European international divisions posted sales and pretax profit gains of 18% and 23%, respectively. Recognizing this success, investors have bid Duracell's stock up more than 50% in the past year, hiking its P/E to a lofty 25.3 (vs. 17.2 for the S&P 500). Even so, Lynne Hyman of CS First Boston expects that the company's sparky international business will power another 20% rise by next May, to $50. Foster Wheeler (FWC; NYSE, $41.75; 1.6%). The global building boom that is expected to lift Caterpillar should have the same effect on this $2.7 billion Clinton, N.J. engineering and construction company, which derives nearly seven of every 10 dollars of revenue overseas. In February, Foster Wheeler announced a joint venture with three Chinese companies to make coal boilers, and it is expected to win a large portion of $4 billion in power-plant construction contracts in China and a $500 million oil-refinery building assignment in Singapore. Levkovich estimates that Foster Wheeler, now selling at 23.2 times estimated 1994 earnings (roughly on par with the industry average), will deliver sturdy 15% annual profit gains over the next five years. He forecasts a stock price of $50 a year from now, for a 20% gain. Boeing (BA; NYSE, $46.25; 2.2%). The world's largest commercial aircraft manufacturer and America's largest exporter (1993 total: $14.6 billion, or 57% of its $25 billion sales) has actually widened its profit margins during the crushing five-year recession in the world's airline industry, in part by slashing 24,000 jobs from its 140,000-strong work force. Gruntal analyst Steve Lewins thinks Boeing will surpass previous highs over the next few years as the world's airline industry enters " a long and profitable cycle." Boeing has already received orders for 150 of its new 777 wide-body planes, the first of which are scheduled to emerge from the company's Washington State hangars next year. Lewins sees strong sales throughout the world with carriers in the Middle East and the Pacific Rim beginning to replace aging planes, as Saudi Arabia did earlier this year when it signed a $6 billion contract with Boeing. In light of those prospects, Lewins thinks the stock is cheap even at its current P/E of 23.1. He figures the company's shares will climb 19% to $55 over the next 12 months and that it could trade as high as $75 within three years. Kellogg (K; NYSE, $49.75; 2.7%). This $6.3 billion food giant -- the largest maker of ready-to-eat cereals in the world -- accounts for 38% of all the breakfast flakes sold in the U.S. But the Battle Creek, Mich. breakfast king is even more dominant overseas, where it holds a hearty 50% share of cereal sales. Even so, that's where the growth potential lies, says Goldman Sachs analyst Nomi Ghez. She notes that rising incomes around the word will vastly increase demand for ready-to-eat cereal, which is still something of a luxury in many areas. Kellogg thinks so too: In 1993 the company opened a plant in Latvia, and during the next two years will begin cereal production in India and China. With a price/earnings ratio of 16, Kellogg shares haven't been this cheap since 1990. Ghez projects a 15% jump in Kellogg's stock price by next May, to $57, with 12% annual hikes for several years thereafter. Steady gains like that should have shareholders roaring louder than Tony the Tiger.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: U.S. stocks with a strong foreign accent You don't have to buy foreign stocks to profit from economic growth abroad. You can hold shares of U.S. companies poised to benefit from overseas sales. Here are 10 superior examples of that breed, ranked by projected 12-month price gain.