If the economy is getting better, even at a slow pace, then blue chips are really cheap, right?
Not so fast.
The pros say don’t get duped into thinking that big multi-nationals are attractive. They may appear relatively cheap but there’s a headwind and it's one you might not immediately think about.
That’s the strong dollar. “Currency is a big story,” says Jon Najarian, co-founder OptionMonster.com.
On Wednesday Procter & Gamble said it expects a negative impact on full-year EPS of -4% as a result of foreign exchange rates.
And with the crisis in Europe a long way from resolved the pros see no reason for the dollar to do anything but march higher.
In turn, that’s a problem for big companies that generate sales overseas and then have to repatriate profits into US dollars.
In other words, it's not just P&G.
“Other big multinationals based in the US are also taking currency hits,” explains pro trader Stephen Weiss, managing partner at Short Hills Capital. “Pepsi came out and said it was looking at a 3% hit to earnings from currency. At Coke it’s between 3 and 5%.”
What’s the takeaway?
“Multinationals are not as cheap as they may look,” says Weiss.
Read More from Fast Money:
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> 10 Top Stocks for the Long-Term Investor
> Top Apple Related Stocks for 2012
Posted by CNBC's Lee Brodie
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Trader disclosure: On June 20, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss is long ANF; Jon Najarian is long call spreads in ARNA; Jon Najarian is long call spreads in BCS; Jon Najarian is long call spreads in CRZO; Jon Najarian is long call spreads in DB; Jon Najarian is long call spreads in BMRN; Jon Najarian is long call spreads in JPM; Jon Najarian is long call spreads in MMR; Jon Najarian is long call spreads in MS; Jon Najarian is long call spreads in MSFT; Jon Najarian is long CIGX; Jon Najarian is long CBOE; Jon Najarian is long CME; Jon Najarian is long DDMG; Jon Najarian is short EUO; Simon Baker is long JPM; Simon Baker is short PG
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