The “benefit of diversification” has always been a strong pillar of investing, maneuvering investors to widen their portfolios across industries, sectors and, most importantly, countries. Though the success of this strategy is sound, the current mundane investment environment does call for slight modifications.

Market gurus have always promoted international investing for the obvious benefits from the relatively low correlation among securities across different countries. The logic is to diversify economic and political risks embedded in every market. However, does the idea of exposing your hard-earned money to various global economies, some of which are on the brink of falling apart, sound appealing now?

China’s sluggish response to its government stimulus, Russia’s close shave with recession and Japan’s murky economic recovery ring enough warning bells to stay away.

Moreover, recuperation in long-stagnant Europe continues to be uneven. France, Italy and Spain reported modest growth after years of stagnation, while the weak performance of Germany, Europe's largest economy, was a sore spot. Greece turned out to be the Achilles’ heel of the Eurozone (no pun intended) due to disagreements with its creditors and ambiguity regarding its solvency and euro membership.

A Glimpse into the U.S. Economy

Taking a peek into the U.S. economy, the rosy picture painted at the beginning of the year was tainted by first-quarter economic contraction and the subsequent lowering of the expected GDP growth rate by the Federal Reserve at its Federal Open Market Committee (“FOMC”) last month.

The numbers also confirm this fact. The S&P 500 index has returned merely around 1% year to date. Also, the index earned around 11% in 2014 as against nearly 30% in 2013. However, the Fed’s assurance of at least one interest rate hike before the current year ends has kept the positive momentum alive.

Also, the uncertain global economy makes the moderate growth expectations of the U.S. economy attractive enough to construct a portfolio more biased towards domestic stocks. On the other hand, the slowing global economy has rubbed on to the U.S. stock market as half the revenues of companies in the S&P 500 come from outside the U.S.

The Logical Solution

It seems lucrative to invest in stocks of those companies that generate majority of their revenues from local operations and are, therefore, less influenced by the sluggish global economy. The improving job market and on-track inflation rate, along with the optimistic expectations from the impending interest rate hike, are bound to favor domestic companies going forward.

So, uphold your patriotism this Independence Day by betting on stocks that stand to benefit from the improving economic environment in the U.S.

The Local Gems

With the help of the Zacks Rank and our style score system, we have shortlisted 3 stocks that largely operate in the U.S. and have great upside potential in the near future. All these stocks sport a projected sales growth (F1/F0) as well as projected EPS growth rate (F1/F0) of 20% or higher.

New Jersey's SITO Mobile Ltd. (SITO) is a technology-based mobile solutions provider and operates primarily in the U.S. and Canada. The company offers wireless application development, publishing and distribution.

Zacks Rank: #1 (Strong Buy)
Growth Score: A
Projected Sales Growth: 70.48%
Projected EPS Growth: 66.67%

Echo Global Logistics, Inc. (ECHO), based in Chicago, provides technology-enabled transportation and supply chain management solutions in the U.S. The company's web-based technology platform compiles and analyzes data from its network of over 22,000 transportation providers to serve its clients' shipping and freight management needs.

Zacks Rank: #1
Growth Score: A
Projected Sales Growth: 44.27%
Projected EPS Growth: 30.04%

Zoe's Kitchen, Inc. (ZOES) operates fast casual Mediterranean cuisine restaurants through its subsidiaries in the U.S. This Texas-based company also grants licenses to qualified franchisees to construct and operate Zoe's Kitchen restaurants.

Zacks Rank: #1
Growth Score: A
Projected Sales Growth: 29.74%
Projected EPS Growth: 133.33%