Top 6 Stocks as the US Dollar Rises

Improving profit margins on internationally sourced merchandise.

• Walmart is one of the largest importers in the world, importing approximately 930,000 twenty-foot container equivalent units (TEU) of merchandise each year. When the U.S Dollar is strong, it becomes relatively more affordable to purchase and import these goods to the United States because each dollar has more purchasing power. Walmart’s huge reliance on imports will mean that - ignoring logistics costs - the profit margin on each imported item sold increases.

Declining Yen makes Japanese electronic goods more appealing.

• Japan’s consumer electronics sector is one of its largest industries. Brands like Canon, Nikon, Nintendo, Panasonic, Sony and Yamaha are all exported from Japan for sale globally. Electronic goods retailers in North America like Best Buy will be able to import these electronics at a far more advantageous price point if the U.S Dollar continues its upwards trend and the Yen continues to exhibit a decline. Profit margins on these goods will see an uplift and should help to offset some of the impacts caused by tougher economic conditions.

Cheaper imports should increase parcel volumes.

• With inflation already putting stress on household finances, consumers may look to foreign markets for their online shopping needs as exchange rates work in their favor. UPS and its peers should see an increase in shipments to American consumers, with receipts in U.S. dollars being an added bonus.

Cheaper imported raw materials lowers manufacturing costs.

• While General Motors manufacture their cars domestically, many of the electrical components and raw materials are sourced from foreign markets and imported to the States. A stronger U.S. dollar means these raw materials should be able to be sourced at a competitive price, improving margins at a time where the company may see a decline in vehicle exports owing to the exchange rate increasing costs for foreign markets.

Imported car parts sold in the US are now less expensive to import.

• Much like Walmart, any goods imported for sale within the United States should see slightly improved profit margins thanks to the rise in the dollar. Considering 75% of Genuine Parts’ business by revenue is U.S. domestic, they should see quantifiable benefits on the sales of their imported products offered through their 5,988 NAPA Auto Parts stores.

US dollar goes further for Americans traveling overseas spurring on international travel.

• A strong US dollar isn’t just great news for businesses. Americans traveling overseas will find that the US dollars in their pocket are now getting them further at the currency exchanger. As a result, Delta Airlines could see an influx in US-based travelers heading overseas in pursuit of a holiday where the cost of living is comparatively cheaper thanks to a strong US dollar. Delta’s partnerships with Air France, KLM and Virgin Atlantic have helped provide Delta passengers with a service network that spans over 60 countries across 6 continents. Given international passenger revenue has recovered 81% of its pre-COVID numbers, we can expect the rising US dollar to further strengthen the recovery.