Buy these stocks if you think the U.S. dollar will keep getting weaker

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Non-U.S. stocks will be particularly attractive to U.S. investors if the U.S. dollar continues to fall against foreign currencies. Many are predicting such a decline. One analyst even expects the dollar to “wipe out all its post-pandemic gains.”

A declining dollar
DX00,
+0.01%

benefits U.S. investors in non-U.S. stocks for two reasons: The local-currency gains of the non-U.S. stocks themselves, and the increased value of those local currencies in U.S. dollar terms.

U.S. investors who own non-U.S. stocks have been enjoying this double-barreled gain since last September, when the U.S. Dollar Index
DXY,
+0.20%

hit a high of nearly 115. It stands at around 100 now. Since that September high, non-U.S. stocks have beaten U.S. equities by more than three percentage points, as judged by the Vanguard Total International Stock ETF
VXUS,
+0.16%

and the Vanguard Total Stock Market ETF
VTI,
-0.01%
.

While there’s no guarantee the U.S. dollar will continue declining, a bet in favor of non-U.S. stocks has a non-currency-related factor in its favor as well: relative valuation. The U.S. stock market is the most overvalued in the world right now, as judged by the Cyclically-Adjusted Price/Earnings ratio (CAPE), which was made famous by Yale University professor (and Nobel laureate) Robert Shiller. In contrast to a 30.8 CAPE for the U.S, Europe’s is 17.4 and Asia’s is 13.8. (See chart below.)

The easiest and cheapest way for U.S. investors to bet on non-U.S. stocks is via an index fund. Vanguard Total International Stock ETF is one of the cheapest, with an expense ratio of just 0.07% — $7 per $10,000 invested.

If you want to try betting on individual stocks, below are those of non-U.S. companies that currently are recommended for purchase by any of the top-performing newsletters that my auditing firm monitors. They are grouped by the countries in which they are headquartered, and then in alphabetical order.

Stock

Country

BROOKFIELD REINSURANCE LT (BNRE)

Bermuda

STONECO LTD (STNE)

Cayman Islands

COMPANIA CERVERCERIAS UNI (CCU)

Chile

NOKIA CORP (NOK)

Finland

AXA SA (AXAHY)

France

SANOFI (SNY)

France

TOTALENERGIES S E (TTE)

France

ALLIANZ SE (ALIZY)

Germany

BASF SE (BASFY)

Germany

BAYER A G (BAYRY)

Germany

DEUTSCHE POST AG (DHLGY)

Germany

SIEMENS A G (SIEGY)

Germany

VOLKSWAGEN A G (VWAGY)

Germany

AERCAP HOLDINGS NV (AER)

Ireland

CIMPRESS PLC (CMPR)

Ireland

EATON CORP PLC (ETN)

Ireland

MEDTRONIC PLC (MDT)

Ireland

SEAGATE TECHNOLOGY HOLDIN (STX)

Ireland

ITURAN LOCATION & CONTROL (ITRN)

Israel

PERION NETWORK LTD (PERI)

Israel

HONDA MTR LTD (HMC)

Japan

TOSHIBA CORP (TOSYY)

Japan

KONINKLIJKE PHILIPS NV (PHG)

Netherlands

NXP SEMICONDUCTORS NV (NXPI)

Netherlands

HOLCIM LTD NEW (HCMLY)

Switzerland

NOVARTIS AG (NVS)

Switzerland

BP P L C (BP)

United Kingdom

HENDERSON GROUP PLC (JHG)

United Kingdom

RIO TINTO (RIO)

United Kingdom

VODAFONE GROUP PLC NEW (VOD)

United Kingdom

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at [email protected]

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