The almighty dollar is down and helping to sell stocks of multinationals such as United Technologies Corp. stimulate. If the falling dollar continues, these four stocks should be among those who continue to enjoy the benefits, according to CNBC.
Exactly one year before today, the DXY US Dollar Currency Index has dropped 11%. To date, it has decreased by 3.5%. At the same time, United Technologies grew 27.9% last year and 8.4% since the close on Thursday. 3M has increased 41.5% year-over-year and has increased by 5.34% since the beginning of the year; Johnson & Johnson grew 23.7% over the year and 0.2% this year; and Freeport-McMoRan grew by 15.5% last year and 2.6% since the beginning of 2018 (for more information visit: United Technologies to surpass 30%: Goldman Sachs.)
On the other hand, multinational companies that sell commodities in foreign currency will not necessarily benefit from more competitive prices. However, by translating foreign currency earnings into a weaker US dollar, these foreign earnings can buy relatively more dollars. This means higher profits in US dollars. (For more information, see: How US Companies Benefit When the Dollar Falls.)
United Technologies, 3M and Johnson and Johnson all said that favorable exchange rates increased sales in the fourth quarter. According to United Technologies, sales increased 200 bps, 270 bps for 3M and 450 bps for Johnson and Johnson. As for Freeport-McMoRan, the mining company generates 60% of its revenue outside the United States, according to CNBC.
After Trump's State of the Union speech on Tuesday, the dollar continued to decline. Concerns over the budget deficit could certainly put additional pressure on the dollar, while Trump called for a $ 1.5 trillion infrastructure bill.
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Exactly one year before today, the DXY US Dollar Currency Index has dropped 11%. To date, it has decreased by 3.5%. At the same time, United Technologies grew 27.9% last year and 8.4% since the close on Thursday. 3M has increased 41.5% year-over-year and has increased by 5.34% since the beginning of the year; Johnson & Johnson grew 23.7% over the year and 0.2% this year; and Freeport-McMoRan grew by 15.5% last year and 2.6% since the beginning of 2018 (for more information visit: United Technologies to surpass 30%: Goldman Sachs.)
Benefits of a weak dollar
While the fall of the dollar is bad news, if you are a consumer who likes to profit from a strong dollar in foreign markets, it is good news if you produce exported goods. A cheaper dollar makes American goods relatively more affordable relative to foreign goods and relatively cheaper means more competitive.On the other hand, multinational companies that sell commodities in foreign currency will not necessarily benefit from more competitive prices. However, by translating foreign currency earnings into a weaker US dollar, these foreign earnings can buy relatively more dollars. This means higher profits in US dollars. (For more information, see: How US Companies Benefit When the Dollar Falls.)
United Technologies, 3M and Johnson and Johnson all said that favorable exchange rates increased sales in the fourth quarter. According to United Technologies, sales increased 200 bps, 270 bps for 3M and 450 bps for Johnson and Johnson. As for Freeport-McMoRan, the mining company generates 60% of its revenue outside the United States, according to CNBC.
Last trains
On Monday, the US dollar recovered from strong US economic data, despite comments by the US government that emphasized the benefits of a weaker currency for exporters. These comments gave the markets reason to doubt that the government will commit to strengthening the dollar.After Trump's State of the Union speech on Tuesday, the dollar continued to decline. Concerns over the budget deficit could certainly put additional pressure on the dollar, while Trump called for a $ 1.5 trillion infrastructure bill.
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