Investing

Top Wall Street Strategist Says to Buy Stocks With Foreign Exposure Now

Expedia

This online travel leader could be poised for a potential big third-quarter report. Expedia Inc. (NASDAQ: EXPE) is the leading internet travel pure-play with exposure to online travel in the United States, Europe and Asia. The company’s portfolio of brands includes Expedia, Orbitz, HomeAway, Travelocity, Hotels.com, Trivago, Egencia, Hotwire, Wotif, Venere and Classic Vacations.

Top analysts see it as a story of improving execution, and they also think that the company finally is starting to match Priceline’s growth metrics. The company has raised the dividend and is buying back stock, and both are shareholder-friendly actions.

The Jefferies analysts noted this recently when discussing Expedia’s outlook for the third-quarter results:

We expect investors to focus on Vrbo and trivago, looking for improving trends, along with potential commentary on expectations beyond fourth quarter 2019 against softening global macro trends. We believe that continued strength in Core OTA, return to growth for trivago and favorable geo exposure should help top-line growth in the second half while operational streamlining and remaining marketing spend efficiencies should still help margins.

Expedia offers investors a 1.0% dividend. The $170 Jefferies target price for the stock is well above the $149.10 consensus price target. The stock closed most recently at $136.03 per share.

Kennametal

This somewhat larger mid-cap company looks like s solid value play now. Kennametal Inc. (NYSE: KMT) develops and applies tungsten carbides, ceramics, super-hard materials and solutions for use in metal cutting and mission-critical wear applications to combat extreme conditions related with wear fatigue, corrosion and high temperatures worldwide.

The company’s product offering includes a selection of standard and customized technologies for metalworking applications, such as turning, milling, hole making, tooling systems and services for manufacturers of transportation vehicles and components, machine tools, and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation.

Kennametal investors receive a 2.72% dividend. Jefferies has set a stunning $50 price target. That compares to the much lower consensus target of $36.32, as well as the most recent closing price of $30.71.

Lear

This stock also has had ups and downs in 2019, and it now offers a solid entry point. Lear Corp. (NYSE: LEA) is a supplier of automotive seating and electrical systems. The company generates approximately 75% of its revenue from its seating business, with the remainder attributable to electrical systems.

The company has made significant strides in its restructuring efforts since emerging from bankruptcy, and it is the second-largest seating supplier globally. Lear continues to target 4% seating outgrowth and sees global share shifting from 23% to 28% over time. Electrification, connectivity and active safety proliferation should help the segment support management’s long-term 6% to 8% outgrowth target.

Investors in Lear are paid a 2.50% dividend. The Jefferies price objective is $151. The consensus target was last seen at $135.69, and the stock ended last week trading at $119.87 a share.

While it probably makes sense to continue to focus on companies with big U.S. exposure, as our economy is still far and away the best in the world, adding some stocks that do have foreign exposure is a very solid idea now.