Top Strategist Says Now's the Time to Buy Stocks With International Exposure

For the longest time, many on Wall Street stressed staying with companies that had more of their business and sales in the United States, and with good reason. With the dollar staying strong over the past few years, that made sense as products and services are more expensive overseas with a strong currency here at home. That tide may beginning to turn, and one strategist thinks it’s time to look for top companies that do significant amount of international business.

In a new Jefferies research report, outstanding Small and Midcap strategist Steven DeSanctis reverses his field and is removing his preference for stocks that get the lion’s shares of the revenue they generate domestically, and he notes that small and midcap stocks with substantial international revenue are performing better. Combine a weaker dollar, with some economic strength globally and the recipe for success is looking good.

DeSanctis and his team refreshed their screen to account for first-quarter results and international exposure and came up with 30 stocks that fit the criteria. We then screened for the companies that also pay dividends, and these five that look outstanding.

Booz Allen Hamilton

This company could be a big beneficiary of increased military sending. Booz Allen Hamilton Holding Corp. (NYSE: BAH) is a leading provider of management consulting, technology and engineering services to the U.S. government in defense, intelligence and civil markets, as well as to major corporations and not-for-profit organizations. Wall Street sees the company using the firm’s cash stockpile for acquisitions and the possibility for increased dividend payouts.

Jefferies also sees the potential for additional growth at the company through potential acquisitions. With cybersecurity also becoming a major priority for U.S. commercial companies, Booz Allen could benefit there as well. The analysts also cite the huge carve-out in the federal budget for cybersecurity as a big positive going forward.

Booz Allen shareholders currently receive a 1.9% dividend. Jefferies has a $40 price target on the stock, while the Wall Street consensus target is $40.40. The stock closed trading on Friday at $35.99.

Delphi Automotive

This company used to be owned by General Motors and is one the newest additions to the Jefferies Franchise Picks portfolio. Delphi Automotive PLC (NYSE: DLPH) is a global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company is one of the most geographically diversified suppliers in the world, with a goal of generating an equal portion of sales from North America, Europe, Asia and the rest of the world.

Jefferies cites the 30% growth of advanced driver assistance systems for autonomous vehicles, which provides safety at a moderate cost. A recent report noted this:

Delphi is the global Electrical/Electronic Architecture (E/EA) leader with 25% market share (55% annual revs). The growing need for vehicle complexity management (wiring/cabling +50% since 2012) suggests E/EA is nearing an inflection point (and is undervalued). Original equipment manufacturers will be more inclined to rely on the company’s expertise in a segment increasingly intertwined with both complex hardware (cabling, wiring, harnesses etc.) and software (Multi-domain, SoC) needs.

Shareholders receive a 1.34% dividend. Jefferies recently raised the price target to $100 from $86. The consensus target is $97.14, and shares closed Friday at $86.69.

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