Foreign Companies to Scrutinize in Revamp of Portfolio.

Is your portfolio too All-American?

It probably is, if you are like most U.S. investors. I have been trying to include a fair sprinkling of non-U.S. stocks among my clients' investments -- the likes of AngloGold Ltd. (South Africa), Banco Latinoamericano de Exportaciones (Panama), Scudder New Asia Fund (primarily Japan, Hong Kong and South Korea), and Tommy Hilfiger (Hong Kong). For most clients, I strive for an international stock allocation of 10 percent to 20 percent.

To me, now is a logical time to diversify portfolios concentrated entirely or almost entirely in the United States. The U.S. market remains expensive and has shown little net gain this year. And by casting a wider net, you may be able to find some bargains.

In September of 1999 and 1993, I devoted this column to recommendations of stocks that would give U.S. investors some diversification and exposure to other markets. The ones I recommended in September 1998 rose an average of 31 percent in the following 12 months. There were seven gainers and no losers.

New report card

Last September, I recommended three new international stocks, and reaffirmed my liking for three of the ones I recommended in 1998. Here's how those six stocks have fared since that column was published a year ago (including reinvested dividends):

* Trizec Hahn Corp., a real estate development and management company based in Toronto, is down 13 percent.

* Panamerican Beverages Inc., a large bottling company for Coca-Cola Co. based in Mexico, is up 0.3 percent.

* Ace Ltd., a reinsurance company based in Bermuda, is up 34 percent.

* Banco Latinoamericano de Exportaciones SA, a Panamanian bank that finances imports and exports in Latin America, is up 23 percent. I own this stock personally and in client accounts.

* CNH Global NV, formerly New Holland NV, is a big Netherlands-based maker of farm equipment. Its stock is down 22 percent.

* Creative Technology Ltd., a Singapore-based maker of sound cards and other products for personal computers and video games, is up 117 percent.

On average, these stocks have gained 32 percent. The Standard & Poor's 500 index, a widely used measure of the U.S. stock market, gained 12 percent during the same period.

I will be surprised and pleased if I can recommend another batch of international stocks this year that gains 30 percent or more. But it will be fun to try. Here come this year's half-dozen.

* Autoliv Inc., based in Stockholm, is the world's largest maker of air bags for cars. It also makes seat belts, protective child seats and other safety equipment. I became aware of it when it acquired one of my favorite U.S. companies, OEA Inc.

The latest available data indicate that spending on car safety is growing roughly 7 percent a year, compared with growth of about 4 percent in vehicle spending in general. I would guess that this trend will persist. And the stock seems cheap to me at about 10 times earnings, 1.1 times book value (corporate net worth per share) and 0.6 times revenue per share. One product on the drawing board that may be lucrative if successfully developed is a collision warning system that would detect imminent crashes.

Energy play

* Gulf Indonesia Resources Ltd., based in Jakarta, seems to me a reasonably priced energy play. The company explores for and produces oil and gas in Indonesia and offshore. The stock sells for 15 times recent earnings, even though analysts are predicting 22 percent annual earnings growth over the next five years.

* Ispat International, based in the Netherlands, operates steel mini-mills in the U.S., Canada, Mexico, Germany, Ireland and Trinidad. It has administrative offices in London, and is controlled by the Mittal family of India. Most U.S. investors came to know it when it purchased Inland Steel Co. (a unit of Inland Steel industries) in 1998 for $1.4 billion.

What attracts me to Ispat is the stock's valuations. At a Sept. 14 close of $6.19 a share, its lowest price since December 1998, the stock was selling for 8.7 times the past four quarters' earnings, 4.4 times this year's estimated earnings, 0.2 times revenue and a price equal to the company's book value per share:

* AngloGold Ltd., which about half of my clients own, is a South African gold mining company that lures me with a dividend yield of 6.7 percent. It sells for only 10 times earnings and posted a return of more than 31 percent on stockholders' equity last year. Like other gold stocks, it should have good defensive characteristics if the stock market slides.

* Banco Latinoamericano, which all my clients own, is making its third appearance in this annual list. The stock fetched $16.13 at the end of September 1998 and $22.88 at the end of last September. It closed Sept. 14 at $28.25. Despite the 75 percent climb, the stock still goes for only 5.7 times recent earnings and 0.8 of book value.

* Scudder New Asia Fund, which many of my clients own, is a closed-end investment fund traded on the New York Stock Exchange that invests in Asian stocks. As of June 30, its investments were 34 percent in Japan, 18 percent in Hong Kong, 17 percent in South Korea and 31 percent elsewhere. I am more positive on Asia, particularly South Korea, than many analysts. And I like the fact that this fund trades at a 26 percent discount to the value of its holdings.

All of the stocks mentioned in this column trade in the United States.

John Dorfman, president of Dorfman Investments in Boston, is a columnist for Bloomberg News.