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A Lululemon in Kitsilano, B.C.RICHARD LAM

John Reese is founder and CEO of and Validea Capital Management, and portfolio manager for the Omega American & International Consensus funds.

In recent years, one of the biggest developments in the investment world has been the internationalization of stock investing. The Internet and online trading platforms have made trading on foreign exchanges more convenient for investors than ever before.

Here in the United States, you don't even need to look to exchanges in Asia or South America or anywhere else. The rise of American Depositary Receipts has allowed investors to buy thousands of stocks of foreign companies trading on U.S. exchanges, in U.S. dollars.

Because of that, I've been able to build and track portfolios of stocks that are based (or do much of their business) in various regions around the world using the same Guru Strategy computer models that I use to track U.S. stocks. While emerging markets such as China and Latin America get much of the investing world's attention, my international portfolios have had the most success recently somewhere else - in Canada.

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Over the past year (through March 12), my 10-stock Canada portfolio is up more than 153 per cent, gaining nearly three times as much as the S&P/TSX composite index and almost three times the S&P 500. That's 50 percentage points better than any of the other regions I track, which include China, the U.S. and Latin America. So far in 2010, the Canada portfolio has returned 14.8 per cent, better than the next-best region by four percentage points, and far ahead of the S&P/TSX and S&P 500, both of which are up a little over 2 per cent for the year.

Several big winners have driven the portfolio's recent success, with the biggest being Thompson Creek Metals, a Toronto-based firm that has extensive operations in British Columbia. Its stock surged more than 122 per cent while in my Canadian portfolio during a two-month span in 2009, and then tacked on another 43 per cent during a one-month stint later in the year.

Two apparel makers also posted excellent gains. Vancouver-based Lululemon Athletica gained 83 per cent during a three-month stint in the portfolio last year (it has tacked on another 24 per cent since returning in late October), and Montreal-based Gildan Activewear jumped more than 67 per cent from late December, 2008, to mid-June, 2009. Gildan added another 36 per cent when it rejoined the portfolio for a month later on in '09.

Part of the reason for the Canadian portfolio's strong performance has been the sharp rise in the loonie versus the U.S. dollar. But the portfolio's big outperformance compared with the S&P/TSX index shows that much of its success has been due to the specific companies it has homed in on. With that in mind, I thought it was a good time to see which U.S.-traded Canadian firms my models are highest on right now. Here's a look at two that get particularly high scores:

CGI Group Inc.

Montreal-based information technology firm CGI Group offers a variety of services, include consulting, systems integration, and management of IT and business functions. The 30-plus-year-old company has offices in more than 100 countries, and has worked with numerous well known firms and government agencies.

CGI, with a $4.3-billion market cap, gets strong interest from the strategy I base on the writings of mutual fund legend Peter Lynch, which considers CGI a "fast grower" - Mr. Lynch's favourite type of investment - because of its strong 22.2-per-cent growth rate (based on an average of the three-, four-, and five-year earnings-per-share figures).

Mr. Lynch famously used the P/E/growth ratio (P/E/G), which divides a stock's price-to-earnings ratio by its historical earnings growth rate, to find growth stocks selling on the cheap. When we divide CGI's 13.6 PE by that growth rate, we get a P/E/G of just 0.61, which easily comes in under this model's 1.0 upper limit.

Mr. Lynch also liked conservatively financed companies, and my model targets those with debt-to-equity ratios under 80 per cent. At just 12.3 per cent, CGI makes the grade.

Lululemon Athletica

Vancouver-based Lululemon Athletica makes clothing for a variety of sports, focusing largely on technical athletic apparel for yoga, running and dancing. It has more than 100 stores in Canada, the U.S., Australia, and Hong Kong.

Lululemon, which has a market cap of about $2.2-billion, gets strong interest from the model I base on the writings of Tom and David Gardner, creators of the Motley Fool investment website. This approach targets smaller-growth stocks that have strong profit margins, low debt, and good momentum, and Lululemon fits the bill. Its trailing 12-month after-tax profit margin of 10.3 per cent easily beats this model's 7-per-cent target, and its relative strength of 96 tops the model's target of 90. (Relative strength measures the price movement of a stock relative to all other stocks in the market.) In addition, earnings per share and sales jumped 67 per cent and 30 per cent, respectively, last quarter (compared with the year-earlier quarter), and the company has a trailing 12-month debt-to-equity ratio of 0 per cent - all great signs.

The Gardner-based approach also looks at the "fool ratio," which is essentially the same thing as Mr. Lynch's P/E/G ratio. It wants this figure to be 0.5 or less, and Lululemon passes the test at 0.48.

Disclosure: I'm long LULU.

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