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The dollar’s rise to a 20-year high has been a cause for concern for investors, but if the dollar pulls back or even stabilizes, there is a group of stocks that could benefit. Evercore ISI strategists have identified S&P 500 companies with high overseas earnings that will benefit if the dollar stops boiling. The dollar index, which is heavily influenced by the strength or weakness of the euro, reached a high of 110.79 last week, but fell to 109.84 in Monday trading. The euro traded below parity against the dollar last week but jumped to a three-week high of $1.013 on Monday. The fall in the dollar helped lift the stock market as a whole on Monday. “The dollar is now at the center of global macroeconomic stress,” said Julian Emanuel, head of equity, derivatives and quantitative strategy at Evercore ISI. “And the two-way price action we started [last] this week is very important right now for the ability and likelihood that the stock price will continue to move strongly towards our target price of 4200.” Evercore ISI expects the S&P 500 to hit 4200 by the end of the year. Strategists in a weekend report note that the dollar has become “parabolic in a near ‘perfect storm'” this year. Factors driving its rise include a hawkish stance from the Federal Reserve, Russia’s invasion of Ukraine, and rising inflation. Evercore ISI strategists tested the S&P 500 for companies from export-oriented sectors that have more than 70% foreign earnings. Companies also have high short interest compared to each company’s 52-week history. Nvidia, for example, made the list, and it has a high the level of foreign sales – 83.8%. The technology company’s shares have lagged 29.6% this year, according to Evercore ISI. The rating of the company is higher than that of stocks. Another technology company, Microchip Technology, receives 78% of its revenue from foreign sources. the stock is not rated by Evercore ISI and has lagged 1.6% since the start of the year. In the consumer goods sector, 80.2% of Estee Lauder’s sales come from foreign sources. The stock has lagged 27.2% this year. Evercore ISI has a lead stock rating. Industrial firm Otis Worldwide has 74.1% of sales overseas and lags its sector by 5.4%. Evercore ISI is not rated stock. Celanese is a materials company with 76.5% of its sales coming from overseas markets, and its stock has lagged its sector by 17.3% year-to-date. Evercore ISI has a stock rating.
Credit: www.cnbc.com /