As the U.S. dollar trades at a 20-year high, Bernstein says these global stocks could benefit

Published Wed, May 11 20227:56 PM EDT

Bernstein has named a raft of global stocks that it says could benefit from the rising strength of the U.S. dollar. The U.S. dollar, which has traditionally been viewed as a safe-haven in times of uncertainty, hovered near a two-decade high against major peers on Wednesday, just days after it reached a new 20-year high on Monday. The greenback has risen for five straight weeks amid a steady climb in U.S. Treasury yields, as investors bet that the Fed will adopt an aggressive rate-hiking cycle to tame rampant inflation. Investors have to purchase Treasury debt in dollars, boosting demand for the currency. Meanwhile, the euro has continued to trade mostly sideways since hitting a five-year low at the end of April. Bernstein noted that the dollar has appreciated against the euro by 14% over the last 12 months — the strongest 12-month move since 2015. Bernstein's analysts, led by Sarah McCarthy, believe there could be further upside to the U.S. dollar, given the "increasing likelihood" that the Fed will continue to pursue a more aggressive rate hike stance relative to the European Central Bank. Read more U.S. dollar touches 20-year high as markets shun risk Dollar clings to 20-year high ahead of U.S. inflation data Controversial stablecoin UST — which is meant to be pegged to the dollar — plummets below 50 cents The bank noted in research dated May 5 that European stocks have tended to outperform U.S. stocks in local currency over the last 20 years when the dollar has been strengthening. "If one thinks the dollar may strengthen further from here, (it moved by 30% over 2014-2015 and has only moved 14% over the last 12 months) then this could be a positive for European equities," McCarthy said. Sectors which have outperformed over the past decade when the U.S. dollar was appreciating against the euro include health care and consumer staples, while high quality, low volatility and large cap European stocks have also tended to outperform, according to Bernstein's analysis. Stock beneficiaries Bernstein screened for large-cap stocks with revenue exposure of more than 30% to the U.S. "These stocks should benefit if the dollar appreciates further, all else being equal," McCarthy said. Stellantis has the biggest revenue exposure on Bernstein's list, with the automaker deriving 68% of its revenue from the U.S. Dublin-based information services firm Experian , British utility National Grid and Dutch retailer Ahold Delhaize all have U.S revenue exposure of more than 60%. A host of companies derive at least half of their revenues from the U.S. They include Deutsche Telekom , French-Italian eyewear firm EssilorLuxottica , British catering giant Compass Group , analytics firm Relx and building materials supplier CRH . Other stocks with significant U.S. revenue exposure include Nestle , British alcoholic beverages producer Diageo and British American Tobacco in consumer staples, as well as UBS and Barclays in financials. Health care stocks that made the list include Roche , Novo Nordisk , AstraZeneca , Novartis , Sanofi and Glaxosmithkline , while SAP , Dassault Systemes , Adyen and Capgemini were among the tech names on the list.

Image showing U.S. dollar bills

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Bernstein has named a raft of global stocks that it says could benefit from the rising strength of the U.S. dollar.