While many on Wall Street expect the U.S. dollar to rally even more in 2016, one strategist believes the opposite will occur and drive multinational stocks to outperform.
"The notion that the U.S. dollar (USD) will continue to appreciate is a widely held consensus view, based on sound economic theory — interest rate differentials suggest higher rate currency appreciates," Fundstrat's Thomas Lee wrote in a note to clients Friday.
He added, "However, there are several reasons to believe this is not enough to sustain USD gains and the USD could be flatter than market expectations in 2016 (and even outright decline)."
The dollar rallied 20 percent in 2015 from early 2014 levels. History shows four out of the last five times a major move like this happened, the currency tended to fall the next year with declines of 10 to 40 percent, according to Fundstrat.
The dollar's rally in 2015 was a headwind and reduced S&P 500 net income by $82 billion, Lee said. Any weakness in the domestic currency this year will boost earnings and sales for companies with large international exposure.
As a result, Fundstrat forecasts 2016 S&P 500 earnings per share of $127, above the Wall Street consensus of $123.
Here are 10 multinational stocks Fundstrat recommended to take advantage of the opportunity.