When Treasury Secretary Steven Mnuchin said recently that a weaker dollar was good for the United States, the eyebrows of every world leader and financial pundit shot up.
Of course a weak dollar is good for an economy enjoying it, including the United States, as exports to other countries are dramatically cheaper and more affordable and imports become more expensive. However, that is just something NEVER said, and the president and Secretary Mnuchin backtracked and back-pedaled the statement at once, both saying that, long term, a stronger dollar was in the best interests of the United States.
The bottom line though is that the dollar remains weak and it makes sense for investors to buy stocks that do a high percentage of their business overseas. We screened the Merrill Lynch research universe and U.S. export data for companies rated Buy that also do much of their business outside the United States. We found five that look like great stocks to own now.
This maker of tobacco products and wine has posted very solid numbers. Altria Group Inc. (NYSE: MO) is a top mega-cap consumer discretionary stock to buy on Wall Street, and the company’s Marlboro brand remains one of the most recognizable in the world.
Many Wall Street analysts concede that the stock has solid downside support owing to the generous dividend yield, which remains at a huge premium in relation to the 10-year Treasury rate. Cash flow generation and the return of cash to Altria shareholders remain key facets of the company’s total shareholder return, and the analysts expect support of the strong dividend, which they believe will continue to climb along with strong share repurchase activity.
To diversify away from cigarettes and cigars, Altria has expanded its portfolio into new categories like wine, e-cigarettes and a 27% stake in brewer SABMiller, which together generated nearly 10% of its pre-excise tax revenue last quarter.
Altria investors are paid a hefty 3.72% dividend. The Merrill Lynch price target for the shares is $82, and the Wall Street consensus estimate is $76.62. The stock traded early Monday at $70.10.
This company remains a top Wall Street energy pick and is up over 10% year to date. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
The company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
For 75 years in a row, Exxon has raised its dividend on a split-adjusted basis. Thanks to the company’s vertically integrated model in the oil and gas business, its profitability doesn’t suffer through commodity price swings like a company that’s a pure play in one segment of the value chain.
Shareholders are paid a nifty 3.46% dividend. Merrill Lynch has a $102 price objective. The consensus target price is set much lower at $88.95. The shares traded at $88.95 Monday morning.