American investors transfixed by domestic debacles might not have noticed that foreign markets have fallen too, in many cases further than ours. But in the eyes of some savvy investors, stocks of well-run, long-standing foreign firms have gone from pretty expensive to awfully cheap in mere months--and that free fall is creating the opportunities they ve been waiting for. When valuations are this extreme, people should just be buying, says David Herro, manager of the Oakmark International fund, who has scooped up shares of French advertising firms and Swiss banks.

It wasn t that long ago that some analysts were pushing the theory of decoupling, the idea that smaller foreign countries would no longer be beholden to the giant American economy for their own growth. Consider decoupling debunked by the ongoing crisis. Many foreign firms found they could not increase profits quickly when their best customers us started to rein in spending.

See Our Slideshow: 5 Global Stocks for Bargain Hunters

The pullback in exports to the U.S. exposed other problems in foreign economies: lax lending standards, an overreliance on commodity goods such as oil, even corruption. The result has been an expected retrenchment in worldwide economic growth, from 3.7 percent in 2007 to less than 1 percent in 2009, according to the World Bank. As the prospects for growth disappeared, world stock markets tanked.

But some analysts think foreign stocks have fallen too far. The Leuthold Group, which tracks market data worldwide, estimates that stocks in 17 of the 23 developed economies now trade near their all-time lows. Companies such as Canon, the Japanese camera company, and French advertising firm Publicis are sitting on a ton of cash with little debt and outstanding competitive positions and they re paying healthy dividends as they wait for a turnaround.

Of course, investing abroad carries more risk than investing in the good ole U.S.A. Foreign economies are often less stable even in stodgy Old World places like France. And if the world s economy sinks into a depression, stocks everywhere could drop further. But some investors think those risks are worth taking at today s prices. To find the best values, we zeroed in on stocks from only the developed economies. Sure, Russian and Indian stocks have gotten cheap too, but they pose more risk than firms from places like Japan.
Below, five picks all easy to buy on U.S. stock exchanges.

NOKIA (NOK)

The worldwide recession has slowed down Americans and Europeans predilection for buying new cell phones. But it hasn t stopped the growth in phone sales worldwide, as consumers from Mozambique to Moldova either ditch their landlines or, in some cases, go from having no phone at all to having a mobile phone. Indeed, it s these emerging markets that will supply the bulk of the growth in handset sales over the next several years, and that plays into the strengths of Finland-based Nokia. With 38 percent market share of the world s 3 billion mobile phones, They re clearly the No. 1 player, says Neil Mawston, analyst in the global wireless practice of Strategy Analytics.

Nokia s manufacturing flexibility allows the company to launch new products quicker than rivals. And its economies of scale mean Nokia can afford to compete on price, says Cynthia Tusan, portfolio manager of the Aston/SGA International Small-Mid Cap Fund. In parts of the developing world, consumers buy phones directly from the handset company and not through wireless-service providers the way Americans do, which helps Nokia strengthen its brand recognition among those nations increasingly affluent consumers.

Nokia certainly has its fair share of problems. The company expects handset sales to drop in 2009. And it lags in fifth place in the U.S., in part because its basic, functional phones haven t captured the public s imagination like iPhones and BlackBerrys. Still, some analysts feel the 56 percent drop in Nokia s share price since May overestimates the company s challenges, and CEO Olli-Pekka Kallasvuo has asserted that Nokia s scale and brand identity will help it during the downturn. The company consistently has higher profit margins than most of its major rivals. But Nokia is at its cheapest since the Nasdaq bubble popped. Meanwhile, the stock pays a hefty dividend.

DIAGEO (DEO)

Consumers historically don t forgo drinking alcohol in a recession, but many do trade down their brands. So it s a good thing U.K.-based Diageo makes a wide range of booze to choose from, everything from top-shelf whiskey Johnnie Walker Blue to the lower-end Popov vodka. The economic downturn has prompted Diageo to shift its advertising emphasis toward moderately priced but still profitable brands, Larry Schwartz, president of Diageo USA told investors recently. Analysts expect sales to increase by 9 percent and profits by 10 percent in 2009. Compared with most other firms, Diageo looks great, says Jim O Leary, manager of the Touchstone International Growth fund. That outlook ought to help support its large dividend.

Even if alcohol sales do drop in a protracted recession, Diageo s global reach could help mitigate the impact. Ten percent of the company s $16 billion in revenue comes from Africa, where drinking habits likely won t be impacted by Wall Street s woes. Diageo s Guinness beer sells better in Nigeria than it does in the brew s native Ireland; in Kenya, drinkers of all income brackets quaff Senator Keg beer, known and loved simply as Obama by the locals. In the U.S., Diageo employs salespeople who focus on just one brand, an effective strategy, says Sasha Kovriga, a portfolio manager with Osterweis Capital Management. That personal service seems to keep bars reordering Smirnoff vodka, Johnnie Walker and Baileys liqueur, three of Diageo s best-selling brands here.

Some investors contend Diageo is a bargain right now. The company has used its free cash to buy back shares, and its debt load remains low. Diageo s balance sheet, paradoxically, can become stronger the longer some of its products sit in the warehouse. That s because while the products of most companies lose value the longer they remain unsold, more than a quarter of Diageo s revenues come from some form of whiskey, which often commands higher prices as it gets older. Just by sitting there, the inventory appreciates, Kovriga says.

SANOFI-AVENTIS (SNY)

These are not exactly salad days for the pharmaceutical industry, particularly since the now-empowered Democrats seem intent on encouraging generic-drug use and driving branded-drug prices lower as elements of any major health care reform. That wouldn t seem to bode well for Sanofi-Aventis, the Paris-based maker of such pharmacy-counter staples as allergy medicine Allegra, blood-thinner Plavix and sleep drug Ambien. But fortunately, nearly two-thirds of Sanofi s $38 billion in sales come from outside North America. The company has a highly profitable vaccine business and a promising drug in its pipeline for heart arrhythmia we think it could be a blockbuster, says Linda Bannister, senior health care analyst for Edward Jones.

To be sure, ObamaCare isn t the only issue on the horizon. More than half of Sanofi s sales come from drugs that lose their patent protection over the next five years. But Sanofi is doing something about generic competition by getting into the generic business. Last year Sanofi launched a bid to acquire Czech drugmaker Zentiva, which makes and sells generic cardiovascular and digestive medicines. And CEO Chris Viehbacher, who joined the company from GlaxoSmithKline on Dec. 1, is expected to overhaul the company s research and development. Meanwhile, the political winds out of Washington could end up helping Sanofi if the Obama administration proves more receptive to stem-cell research than the Bush administration did.

Sanofi s depressed stock more than reflects the problems it and the industry at large face, analysts say. Its shares are down nearly 30 percent from their 52-week high, and it trades at seven times 2009 s expected earnings. Analysts expect it to increase sales by 6 percent and profits 13 percent in 2009. At these prices, and with the company s large dividend, patient investors have an incentive to wait.

PUBLICIS GROUPE (PUBGY)

While most of the world is enduring its first major economic pullback of the 21st century, advertising is undergoing its second. In 2001, after the tech bubble burst, ad spending fell nearly 10 percent in the U.S. But this downturn could be less severe for the advertising world, as ad budgets get trimmed but not eliminated. Conor O Shea, media-equity analyst for Kepler Capital Markets, predicts a 6.5 percent revenue drop in U.S. ad spending this year and a 2.5 percent drop globally. If history repeats itself, ad spending will come back, and advertising-agency stocks will soar.

That bodes well for Paris-based Publicis Groupe, one of the four largest global advertising firms. The company owns Saatchi & Saatchi, Leo Burnett and other firms that have created ad campaigns for such varied clients as the British Labour Party and the Nintendo Wii. To be sure, Publicis will see its fair share of suffering this time around floundering General Motors is one of its largest North American clients. But the majority of an ad agency s assets are people, not big factories, which means Publicis has very few costs it can t trim, a big plus in a weak economy. And the firm has bulked up its online presence, getting a head start on its competitors by buying leading online ad firm Digitas. The company expects most of its growth this year to come from digital advertising and emerging markets; the latter account for about one-fifth of its $6.4 billion in annual revenue.

Publicis s stock trades well below its 10-year average P/E. Its shares are down almost 30 percent over the past 12 months. But Publicis should rally on even a hint of an economic recovery, says Oakmark International s David Herro, who has been buying the stock.

CANON (CAJ)

In 2007, while the world s stock markets took off, much of corporate Japan treaded water. But this fall Japanese shares fell with everyone else, and now they re at some of their cheapest levels ever, according to Leuthold Group. So investors are taking a fresh look at high-quality Japanese firms, including Canon. Over the past four years, the company has become more efficient and profitable. It s one of the leaders in digital-camera sales and was on pace to sell more than 23 million in 2008. That would be a 10 percent jump from 2007, a big accomplishment, considering the economic climate.

Canon s copier and office-equipment businesses have made shareholders worry recently. The deteriorating global economy combined with the increasing value of Japan s yen has made those products less attractive abroad, notes Ryosuke Katsura, senior analyst for the investment bank Mizuho. However, Canon isn t taking a downturn lightly, creating a central computer system that could trim more than $1 billion in costs annually by keeping tabs on sales, production and development costs.

At the beginning of 2008, Canon had $8.5 billion in cash with almost no long-term debt. The firm bought back nearly 27 million shares, or 2 percent of the shares outstanding, making an already cheaply valued stock even cheaper. And with the company expected to generate $7 billion in free cash this year, analysts suspect it could raise the dividend, which currently yields 3.6 percent, or buy back even more shares.