While The Dollar Rises, Multinationals Dive

Pop quiz: What do these four companies have in common?

  • Caterpillar Inc. (CAT)
  • Deere & Co. (DE)
  • Dr Pepper Snapple Group Inc. (DPS)
  • Harley Davidson Inc. (HOG)

I’ll give you a hint: If you run these stocks through Portfolio Grader, you’ll see that not a single one passes the Louis litmus test. Both DE and DPS are currently holds, HOG is a D-rated sell and CAT outright flunks with an F-rating. The fact is that institutional investors have been unloading these stocks over the past month. And it will take a significant reversal in buying pressure before you can get a buy recommendation out of me for any of these stocks.

But these four companies have something else in common—while each is based in the United States, each has a huge global footprint. Caterpillar serves customers in 180 countries. John Deere is redefining itself from an all-American company to a major player in emerging markets. Dr Pepper has big plans for the Caribbean and Mexico. Harley Davidson now has more international dealers than U.S. dealers.

And while this would have been great news as recently as 2012, 2013 has brought some big challenges for American multinationals, most notably the fluctuation in the U.S. dollar. As I mentioned last week, the relatively strong U.S. dollar is pinching overseas profits of multinational companies. This pinch is going to be felt particularly hard by shareholders: 40% of the S&P 500’s sales are outside the U.S.

So over the next few weeks I urge that you take a close look at your holdings and see how many multinationals you own. For the most part, sticking to domestic bets will help you ride out these currency fluctuations.

A good place to start is by reviewing the 30 big blue chips that were just upgraded and downgraded this week. If you hold any of the stocks below (many of which are multinationals), you may want to take note because they are making big moves.

Upgrades

Last Week’s Holds, Now Buys

Symbol Company Name Quantitative Grade Fundamental Grade
ABT Abbott Laboratories B B
CERN Cerner Corp. B B
DIS Walt Disney Co. B B
EPD Enterprise Products Partners L.P. B B
ICE IntercontinentalExchange Inc. B C
KEY KeyCorp B C
LTD L Brands Inc. B C
NGG National Grid PLC ADS B C
NU Northeast Utilities B B
SCHW Charles Schwab Corp. B C

Last Week’s Sells, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade
CF CF Industries Holdings Inc. D C
COP ConocoPhillips D C
CTL CenturyLink Inc. D B
KO Coca-Cola Co. D C
PXD Pioneer Natural Resources Co. C C
USB U.S. Bancorp D C
YUM Yum! Brands Inc. C C

Downgrades

Last Week’s Buys, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade
ACE ACE Ltd. C B
BAC Bank of America Corp. B C
HDB HDFC Bank Ltd. ADS C B
MSI Motorola Solutions Inc. C B
PGR Progressive Corp. C C
SNDK SanDisk Corp. C B
TTM Tata Motors Ltd. ADS C C
WLP WellPoint Inc. C B

Last Week’s Holds, Now Sells

Symbol Company Name Quantitative Grade Fundamental Grade
AGU Agrium Inc. D C
APC Anadarko Petroleum Corp. D C
MBT Mobile TeleSystems ADS D C
PLD Prologis Inc. D C
VIV Telefonica Brasil SA ADR D C

Sincerely,

Louis Navellier

Louis Navellier

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