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Recovery Will Be Like a 'Ping Pong Ball' : Strategist

The U.S. dollar has been edging lower against a basket of currencies as gains in global stock markets reduced the greenback's appeal as a safe haven. Eric Schoenstein, co-portfolio manager of Jensen Portfolio and Sam Stovall, chief investment strategist at Standard & Poor’s shared how investors can take advantage of the weaker dollar.

“I think [investors should be happy] about the weaker dollar because more and more of the revenues of the companies in the S&P 500 comes from overseas operations,” Stovall told CNBC. “That would translate to better earnings and right now, we need an improvement in earnings, not only from cost cutting but also from topline growth.”

Stovall said he expects an improvement in overall GDP expectations based on the 'Cash for Clunkers' program, more stimulus taking affect, and the continuing weaker dollar.

  • US Dollar Index Today: Interactive Charts

“We’re going to have irregular growth over the next several quarters,” he said. “It will be more like a ping pong ball bouncing on a table rather than being a pronounced W-[shape].”

In the meantime, Schoenstein said companies that have businesses overseas have the ability to be able to perform in any environment.

“So if the weaker dollar is present they can get the overseas revenue, and they have the diversity when the dollar is stronger to get it locally as well,” he said.

Schoenstein said he doesn’t see a double dip coming for the markets and told investors to focus on quality, growth companies with strong balance sheets, dominant market positions and global reach.

“A probability of a double dip is a 25 percent or less,” he said. “It’s more about whether or not we have a pause in the recovery rather than an actual double dip. And a pause will allow companies with global franchises to take advantage of opportunities.”

Schoenstein Likes:

Colgate-Palmolive

Abbott Labs

Emerson Electric

Oracle

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Disclosure:

Schoenstein owns shares of CL, ABT, EMR and ORCL.

No immediate information was available for Stovall or his firm.

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