4 Stocks That Stand To Benefit From A Weaker Dollar

 

With the mighty U.S. dollar down 11% since March, these 4 stocks should see a boost.

The mighty dollar has had a rough year.

Since its highs back in March, the U.S. dollar has fallen 11% and is now at lows not seen since April 2018.

“We are still in the early innings of dollar depreciation,” Pimco portfolio manager in Hong Kong, Stephen Chang, said recently. “An important factor to watch is whether a phrase four fiscal stimulus package will be passed in the U.S., as otherwise the discontinuity of fiscal support will lead to a significant risk-off and USD bullish event.”

The dollar has come under increasing pressure as the Trump administration has struggled to gain control over the coronavirus pandemic and as the Federal Reserve has pledged unlimited liquidity to support the battered U.S. economy.

While Democrats and Republicans have been trying to break an impasse over a new coronavirus stimulus bill, investors are already concerned about rising inflation given the record stimulus bill Congress passed back in March. The mighty dollar could also face further weakness given that Federal Reserve Chairman Jerome Powell said last week that the central bank is now comfortable with higher levels of inflation, implying that U.S. interest rates will stay lower for longer.

“Under the Fed’s new regime, even once the U.S. economy begins to recover, markets will have far less reason to expect higher rates in the U.S.,” said Ranko Berich, head of market analysis at Monex Europe Ltd. in London. “As such, we are likely to see a far less responsive U.S. dollar to any possible economic upswing.”

With the dollar likely to remain depressed, sectors with high exposure to international markets—including materials, technology, and consumer staples—should see a boost.

JC O’Hara, chief market technician at MKM Partners, says you can already see this playing out in some of the stocks in these sectors.

“When you get down to the individual stocks, you want to find those companies who derive a good portion of revenue from overseas,” O’Hara said. “Off the March low, we [saw] a basket of S&P 500 stocks with above average revenue from international markets outperform. That basket returned 61%. Now that compares to the S&P, which over that same time period was up 53%.”

“The moral of the story is, you want to go hunting in a weak dollar environment for those companies that have good foreign earnings,” O’Hara added.

Washington Crossing Advisors portfolio manager Chad Morganlander said he’s watching the industrials space for opportunities.

“Because of the weak dollar environment, these industrials have, from a valuation perspective, been trading quite cheaply,” Morganlander said. “And as you start to go past 2021 into 2022, we believe that the industrials valuations will go up considerably.”

Morganlander has his eye on four stocks in particular: 3M (NYSE: MMM), General Dynamics (NYSE: GD), Honeywell (NYSE: HON), and Raytheon Technologies (NYSE: RTX).

“We believe for investors that have a two- to three-year time horizon,” Morganlander said, “you can do quite well and also benefit from this weak dollar environment.”

 
Trending Ideas

Featured Stocks On The Move

Daily Rundown
  • Services, Renewable, Batteries, Midstream

    Ranger Energy Services, Inc. (RNGR) Ranger Energy Services, Inc. provides well service solutions to the oil and gas industry. The company specializes in high-spec rigs, well maintenance, and completion services,... Read More

  • Analytics, Manufacturing, Appliances, Energy

    ExlService Holdings, Inc. (EXLS) ExlService Holdings, Inc. is a leading provider of data analytics and digital operations solutions. The company helps businesses enhance decision-making, streamline operations, and achieve transformative growth... Read More

  • Wellness, Energy, Construction, Exploration

    LifeVantage Corporation (LFVN) LifeVantage Corporation is a wellness company focusing on nutrigenomics to improve health and longevity. It offers science-backed dietary supplements and skincare products aimed at optimizing health and... Read More

  • Housing, Biotech, Technology, E-commerce

    Fannie Mae (FNMA) Fannie Mae provides liquidity and stability to the U.S. housing market by purchasing mortgages from lenders, enabling them to offer more loans. The company plays a critical... Read More

  • Aviation, Medical, Biotech, Biopharmaceutical

    FTAI Aviation Ltd. (FTAI) FTAI Aviation Ltd. specializes in acquiring, leasing, and managing aviation assets, including aircraft and engines. The company provides innovative solutions to airlines and operators, optimizing performance... Read More

  • Airlines, Data, Regenerative, Diagnostics

    Frontier Group Holdings, Inc. (ULCC) Frontier Group Holdings, Inc., operating as Frontier Airlines, is an ultra-low-cost carrier focused on providing affordable air travel. Known for its fuel-efficient fleet and customer-centric... Read More

  • Electronics, Diagnostics, Construction, Analytics

    Advanced Energy Industries, Inc. (AEIS) Advanced Energy Industries, Inc. develops precision power conversion, measurement, and control solutions. Serving industries like semiconductors, telecom, and data centers, the company drives innovation in... Read More

  • Technology, Energy, Biopharmaceutical, Banking

    Aeva Technologies, Inc. (AEVA) Aeva Technologies, Inc. develops advanced sensor technology for autonomous vehicles and industrial applications. Leveraging unique LiDAR capabilities, the company delivers 4D sensing solutions to enhance safety,... Read More



Top 3 Stocks in Leading Sectors
  • 3 Consumer Stocks To Buy Now

    Playa Hotels & Resorts N.V. (PLYA) Playa Hotels & Resorts N.V. owns and operates all-inclusive beachfront resorts in prime locations across the Caribbean and Mexico. The company offers luxurious accommodations,... Read More

  • 3 Aviation Stocks To Buy Now

    Kratos Defense & Security Solutions, Inc. (KTOS) Kratos Defense & Security Solutions, Inc. specializes in developing and deploying advanced defense technologies, including unmanned systems, satellite communications, and cybersecurity solutions. The... Read More

  • 3 Apparel Stocks To Buy Now

    V.F. Corporation (VFC) V.F. Corporation is a global leader in branded lifestyle apparel, footwear, and accessories. With a diverse portfolio of iconic brands like Vans, The North Face, and Timberland,... Read More

  • 3 Defense Stocks To Buy Now

    FTAI Aviation Ltd. (FTAI) FTAI Aviation Ltd. focuses on acquiring, leasing, and managing aviation-related assets, such as aircraft and engines. The company provides tailored solutions to airlines and operators, ensuring... Read More

  • 3 Energy Stocks To Buy Now

    Antero Resources Corporation (AR) Antero Resources Corporation is a leading natural gas and liquids exploration and production company. Operating primarily in the Appalachian Basin, the company focuses on responsible energy... Read More

  • 3 Healthtech Stocks To Buy Now

    AVITA Medical, Inc. (RCEL) AVITA Medical, Inc. is a regenerative medicine company focused on innovative skin restoration solutions. Its patented RECELL System supports the treatment of burns and skin injuries,... Read More

  • 3 Technology Stocks To Buy Now

    Innodata Inc. (INOD) Innodata Inc. is a data engineering company specializing in digital transformation solutions. The company provides AI-driven data annotation, content services, and digital consulting to empower businesses in... Read More

  • 3 Finance Stocks To Buy Now

    FS KKR Capital Corp. (FSK) FS KKR Capital Corp. is a business development company providing customized credit solutions to middle-market businesses. Through its diversified investment portfolio, the company supports growth... Read More