I’m seeing green now that the U.S. dollar is hovering a one-year low. While the dollar rose on a near-term blip today against some of the world’s major currencies, with the Fed sticking to its low-interest rate policy it’s only a matter of time before the dollar cracks again.
This news is music to my ears. Now, I’m not saying that you should rush out and buy gold or silver like so many investors have this week—prices for these precious metals surged last week but have settled down since. No, my eye is on a different kind of gold rush—one that should kick off in about two weeks.
That’s because January 9 marks the official start to fourth-quarter earnings season, when aluminum giant Alcoa Inc. (AA) reports its quarterly operating results. To be clear, AA is a D-rated sell in my Portfolio Grader screening tool, so I don’t want you to load up on this metal play either. However, I expect plenty of profit opportunities to open up the first few weeks of earnings season.
That’s because the weakening dollar is a boon to corporate profits, particularly for multi-national companies. Companies likeJohnson & Johnson (JNJ) and Hershey Co. (HSY) are typically paid in international currencies and pay their expenses in U.S. dollars. So this is a big deal. In fact, approximately 40% of the S&P 500’s earnings come from outside the U.S.!
During much of 2013, the relatively strong dollar weighed on bottom lines, but it looks like that’s about to change. So as we approach the kickoff to fourth-quarter earnings, let’s keep an eye out for profit opportunities among multinational companies.