One of the problems with a strong dollar is that it causes a headwind for international companies. Citigroup’s Home and Personal care analyst, Wendy Nicholson, points out that in 2003 and 2004, the weaker dollar provided very strong sales boost from foreign exchange. For instance, Clorox added 2.4% and 3.0% sales growth in 2003 and 2004 from foreign exchange translation. Gillette added 5.6% and 4.6% and Procter and Gamble gained 3.5% and 3.6% sales growth in the last two years.
These trends will now reverse with the dollar starting to gain strength. That will dampen the strong sales growth international companies have benefited from over the past two years. If you own AVC, AVP, CLX, CL, G or PG on the home products front, expect slower growth and less exuberant stock prices.
The stronger dollar…
….could lead to lower stock prices in the home goods sector.
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