Given U.S. dollar weakness (-13% in 2017, down ~2% in 2018), continue to favor companies with high revenue exposure to Europe.
S&P 500 companies with 10-30% or more of revenues from Europe reported better median Q3 sales/EPS growth, more sales/EPS surprises, and better Q4 sales/EPS growth.
Top Focus List picks with high revenue exposure to Europe include ATVI, ALGN, FB, MCHP, ILMN, WP, FLIR, VRTX, CRM, PYPL, NVDA, GOOGL, AMAT.
Given U.S. dollar weakness, commodity sector outperformance is not abnormal. Historically, Energy and Materials are by far the most negatively correlated with the U.S. dollar.
The last time U.S. dollar weakness persisted for this long (2006-2008), commodities had a period of wide outperformance versus all other sectors, stretching months past an eventual October 2007 market top.
Combining the two themes, S&P 500 Energy and Material names with high revenue exposure to Europe include XOM, CVX, COP, PSX, FCX, LYB, IP, ARNC, PPG, DWDP.
