8 Stocks Poised to Benefit from a Weaker Dollar

A strong dollar reflects a robust U.S. economy, low Federal Reserve interest-rate increases, and tax policies that encourage companies to bring back profits from abroad. A weak dollar can signal an economic downturn, rising inflation, or both. The weakening of the dollar stands as a key driver behind increasing commodity prices. Given commodities are globally traded in dollars, a drop in the currency’s value inflates the price of oil, gold, and other commodities.

What’s behind the weakening US dollar?

And when you look at the full scope of this international restaurateur with more than 36,000 global restaurants in more than 100 countries, you’ll appreciate how complicated that can be. Also, KO has increased its dividend at least once a year for half a century, so it’s a pretty safe bet you’ll keep getting paid by Coke regardless of short-term economic trends. Coke faces several long-term challenges, of course, as a trend toward healthier and more natural products has sapped demand for sugary soft drinks.

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When investors sell other currencies to buy dollars, they drop in value. Qualcomm (QCOM, $108.25) designs its own patented semiconductors and microchips for use in wireless electronics, but it doesn’t actually make them. Instead, it relies on outside companies to manufacture them through licensing agreements – and because most of those firms are located overseas, the vast majority of QCOM revenue comes from abroad, too. In the intervening years, however, McDonald’s has more fully embraced local flavors by offering region-specific fare.

In 2019, PayPal bought stakes in Chinese online payment company GoPay and Argentinian e-commerce firm MercadoLibre. In May, it partnered with Gojek, a Southeast Asian online payment firm based in Jakarta. We rarely worry about whether the dollar is strong or weak relative to other foreign currencies, unless we have plans to travel abroad and need euros, yen or pesos oanda broker (although we’re not doing much of that lately). Even so, moves in the dollar can affect your port­folio in surprising ways. The dollar-conversion math works for investors in emerging-markets stocks, too. Over the past 12 months, those shares have blown past developed-country shares.

The most commonly compared currency is the Euro, so if the Euro is rising in price compared to the dollar, the dollar is said to be weakening at that time. Essentially, a weak dollar means that a U.S. dollar can be exchanged for smaller amounts of foreign currency. The effect of this is that goods priced in U.S. dollars, as well as goods produced in non-US countries, become more expensive to U.S. consumers. In a challenging economic environment, consumer staples such as cleaning products and personal care items are a good place for defensive investors to hide out.

Activision has racked up bonus points from a boost in gaming during the pandemic-related lockdown. review the little book that still beats the market And the November–December release of two next-gen gaming consoles, Microsoft’s Xbox Series X and Sony’s PlayStation 5, may gin up another wave of enthusiasm in the months to come. In late 2019, Activision launched a mobile-device version of Call of Duty, its hugely successful war game. Since then, the game has tripled its reach, according to the company, topping the charts for installments in more than 150 countries.

What Is the Euro/Dollar Exchange Rate in 2024?

Historically, the U.S. dollar has been among the safest and most respected currencies in the entire world. That preferred status likely will not change significantly anytime soon, given America’s comparatively strong economy and stable government. Of course, Uncle Sam likes it when giant multinationals make more money because that means they’ll be paying more in taxes.

Many of the low-cost provider countries produce goods that are unaffected by U.S. dollar movements, however. They let their currencies fluctuate in tandem with the fluctuations of the U.S. dollar, preserving the relationship between the two. Costs decline in a falling U.S. dollar environment regardless of whether goods are produced in the United States or by a country that links its currency to the U.S. Let’s say that one euro buys $1.54 compared to a prior rate of $1.35 in a falling dollar environment.

This means a dollar buys less gas and that pinches many consumers. While that scenario is unfortunate, investors can have their revenge, so to speak, by investing in the stocks of U.S. multinational corporations, which earn a significant portion of their profits overseas. Shares have soared in recent months and currently trade at 73 times projected earnings for the next four quarters. That said, analysts expect 20% average annual earnings growth over the next three years, ahead of the 9% three-year earnings growth rate for Nvidia’s peers.

Baron Emerging Markets

The company’s acquisitions of Alere and St. Jude Medical in 2017 were key to beefing up its global business. Alere gave Abbott a top spot in point-of-care diagnostic tests (the ones administered in your doctor’s office, such as the test for the flu). And with St. Jude Medical, Abbott now dominates the worldwide cardiovascular device market. The purchases helped to drive the company’s overall growth in revenues in recent years, according to Abbott, particularly in emerging markets, which represent 40% of total sales. The values of about 170 currencies fluctuate constantly in the foreign exchange, or Forex, markets. However, just four currencies are used as benchmarks and they are routinely compared to each other as a measure of relative strength or weakness.

• Qualcomm (QCOM, $108.25) designs its own patented semiconductors and microchips for use in wireless electronics, but it doesn’t actually make them.
• Major drugmaker Pfizer (PFE, $38.45) derives 46% of its revenues from the U.S. vs. other geographies, according to financial statements for fiscal year 2019.
• Google parent Alphabet (GOOGL, $1,498.37) racked up revenues of $161.9 billion in 2019, with slightly less than half of that ($74.8 billion) attributable to U.S. operations.
• The U.S. is often on China’s case for keeping its currency too weak relative to the dollar, in order to boost exports.
• He rates the stock a “buy” and expects a 9% climb in annual revenues for the fiscal year that ends in June 2021, along with a 21% jump in earnings.
• Soaring inflation and economic uncertainty following the Brexit vote led to a loss in confidence in the pound.

Business & economics

But the broad product portfolio of this nearly 120-year-old consumer giant all but ensures it will stay relevant Forex trading strategies in both the near future and for many years to come. Broadcom (AVGO, $325.93) is a major chipmaker that designs and manufactures a range of semiconductor devices used in communications applications ranging from Wi-Fi and Bluetooth technology to GPS and cable TV. Based on 2019 numbers, net revenue booked in the U.S. tallied just $4.2 billion, against $8.1 billion in China and a total of roughly $22.6 billion. Sure, topping the $100 billion mark in the U.S. is an incredible feat, but that should not distract investors from the fact that this figure is only about 45% of total sales. The rest of the world is collectively generating more in sales than America. American audiences are currently the most lucrative, of course, and that’s what helps make this smaller region matter more.

Like the promise it makes to its customers, Estée Lauder (the company) is looking good for its age. In August, it announced a two-year plan to emphasize high-growth areas, including e-commerce, skin-care lines and China sales. The company will shutter 10% to 15% of its physical stores, pare down its distribution network and pull out of department stores with underperforming counters. Astrachan says these moves could yield $300 million to $400 million in savings over the next two years. Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.