In the past 40 years, not once has the United States’ stock market been the best performer in the world in any given year. At best, American stocks have been finding their way into the middle of the pack, and given enough time, the U.S. stock market’s results are often in the bottom 20% of all developed markets.

That’s why it’s important for investors to allocate at least a small portion of their portfolio to international stocks. With the right strategy, the potential rewards are much greater and often carry no more risk than buying a U.S. stock.

Buying shares of an overseas company isn’t difficult, either; many companies have shares that trade on U.S. exchanges just like an American stock.

So if you should put some of your money in international stocks, where should you look?

If the forecasts are right, then Brazil’s economy will be shoulder-to-shoulder with China, the United States and India by the year 2050. That’s quite a growth spurt in the works, considering Brazil’s economy is currently only the eighth largest in the world. But 2050 is a long way off, and the investment-worthy opportunities are presenting themselves today — you can’t sit on the sidelines with a “wait and see” approach if want to make money from them.

It’s not just a pipedream, either. The numbers South America’s biggest country have been putting up in recent years do indeed suggest that this Latin American powerhouse will be everything it’s expected to be. In fact, it’s already on the way. While Brazil was bumped around by the global recession like the rest of the world in 2009, its GDP only fell 0.2% that year. By 2010 it was back on track with a growth rate of 7.8%. Its GDP is expected to grow by another 4.5% in 2011, compared with an expected growth rate of 3.2% in the United States.

Vale SA (NYSE: VALE) may be one of the ideal ways to take a stake in Brazil’s accelerating economy. Although categorized as a mining stock, the description doesn’t quite do the company justice. Yes, it mines industrial metals — mostly iron — but it also operates several plants and mills to turn what it mines into marketable steel products. Moreover, the company has its own transportation infrastructure that’s open to other paying customers. It even generates much of its own electricity to offset the expense and volatility of buying it from a utility company.

All in all, a snapshot of Vale’s operation makes for a pretty nice picture. But that’s not even the compelling part for investors. What does every growing country need? Infrastructure… If Brazil is going to become a powerhouse by 2050, then Vale is going to build a great deal of the framework behind that growth.

An industrial giant isn’t the only smart investment play in Brazil, though.

Believe it or not, consumers who are glued to their cell phones isn’t an American phenomenon. It’s becoming a global phenomenon, including in Brazil. Cellular phone service provider Vivo Participacoes S.A. (NYSE: VIV) is not only well aware of this, but is profiting handsomely because of it.

Simply put, things went from good to better for Vivo Participacoes in 2010. The company is on pace to earn $2.33 per share for fiscal 2010, and the number is forecasted to reach $2.82 in 2011. That projected growth rate of 21.0% translates into a forward-looking price-to-earnings (P/E) ratio of about 12., compared with the current P/E of 15.6 for the S&P 500.

But this doesn’t even scratch the surface. The cell phone and smart phone revolution is just getting started in Brazil, with the bulk of the potential growth still ahead rather than in the past. Latin America’s mobile phone market grew 28% in 2010 and is expected to grow by 76% in 2011. Smartphones were the big driver of that growth: that market swelled by 145% in Latin America last year.

In other words, Vivo is in the right place at the right time.

Finally, long-term investors should consider Brazilian water utility and sewage service provider Companhia de Saneamento Basico (NYSE: SBS) — or SABESP — as a way to tap into the growth of a country that’s rapidly becoming a modernized, growing nation.

Even by water utility standards, SABESP shares are undervalued. Its trailing P/E of 6.4 and the projected P/E of 6.8 are unheard of for U.S. water utility stocks. As of right now, the average P/E of the United States’ major water utility stocks is a hefty 26.1 (the cheapest is American Water Works (NYSE: AWK), with a trailing P/E of 18.5). Yet, none of the major water utility names based in the United Sates have even come close to earning and growing as consistently as SABESP has in the past five years.

Throw in the fact that Brazil’s population is expected to grow from 200 million now to 260 million by 2050, and those people will need running water to and from their home, and you’ve got a big built-in growth opportunity.

Action to Take –> Is Brazil poised to be the world’s leader in 2011? Maybe, maybe not. Statistically speaking though, it is likely to outpace the U.S. market no matter how things shape up this year. Any or all three names would offer a smarter risk/reward ratio than most domestic stocks.

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