Montreal, Canada

With U.S. consumers hunkered down by high debt levels, flat wage growth and weak employment prospects, companies are drawing the bulk of their revenues from international sales this year. Approximately 20% of companies represented in the S&P 500 Index have already reported Q1 results and the big picture shows a clear trend emerging in non-U.S. sales, boosting the bottom line.

One of my favorite companies is McDonald's (NYSE-MCD). The world's largest fast-food chain reported an 11% increase in Q1 earnings, driven by strong sales worldwide, especially overseas. While most American multinationals are struggling to increase domestic sales, MCD actually saw same-store sales in the United States rise 4.2% in March – the first increase in two months. But the big trend is in overseas revenues. Same-store sales rose 5.2% in Europe and 5.7% in Asia, the Middle East and Africa. The company reported a $1.09 billion dollar profit in Q1 compared to $979.5 million dollars a year earlier.

The TSI Portfolio owns McDonald's – now trading near an all-time high. McDonald's is also one of the largest holdings in my personal retirement account. In 2008, MCD's stock price grew by about 10% amid a global financial panic while broader averages plunged 40% or more.

On Monday, I noted U.S. corporate non-financial free cash-flow sits at 2.8% of gross domestic product (GDP) – near a 40-year high. U.S. large-cap stocks outside of the financial sector harbor high free-cash flow and have significantly pared down company debt over the last ten years in an environment of low interest rates.

While the U.S. government is approaching record-high deficits as a percentage of GDP, domestic large-cap non-financial stocks are sitting at the opposite side of the spectrum with low net debt and high free-cash. Uncle Sam can learn a lot from Corporate America.

To be sure, many large-cap non-financial companies in the United States and abroad are not inexpensive at these levels following a massive rally off the March 9 lows last year. I'm waiting for a correction to accumulate more McDonald's, Nestle, Diageo plc, Coca-Cola and Pepsi Co. Regardless of the economic cycle and the long-term damage done to U.S. domestic consumption amid debt deleveraging, consumers will always have to eat and drink.