UBS: BBD profit from a lower CAD$Sorry, I have no link for this one. Just out of StockStream. Google it or do your own DD.
Stocks that benefit from a lower loo
11/03/08 12:52:00 |
The Canadian dollars rapid decline to a multi-year low of US77.2 has investors looking for ways to capitalize on the move, despite the dire economic outlook. Even with the recent rally that sent it back above US83, the loonie is still off roughly 15% in just over a month. The Canadian dollar is expected to remain subdued if a weak recovery and the pressure on commodities that would likely accompany it follows the global economic slowdown. After all, the loonie is 96% correlated to commodities, according to UBS. Fluctuations in the Canadian dollar only provide an offset to moves in commodity prices, which means potential winners lie outside the energy and materials sectors, strategist George Vasic told clients. UBS analysts considered the fact that the loonie is just one factor among many moving parts and came up with a list of names where the currency impact helps, but only when there is a solid underlying investment case in the first place. tops the list as a decline in the loonie of just a penny adds 2 to its earnings per share (EPS). It has no currency hedges in place, according to UBS.
Next up is Bombardier Inc., which gets 0.8 in EPS from a penny drop in the Canadian dollar. It is largely hedged for the next year. The third and final name among industrials is , which has no hedges and gets an additional 1 in EPS for a one cent decline in the loonie. In the consumer space, and both get a boost from a weaker Canadian dollar since 88% and 70% of their earnings come from the U.S., respectively. meanwhile, is partially hedged and gets a 2.5 boost to EPS when the loonie falls by 1%. Finally, given its exposure to the European market, a 1% decline in the CAD/EUR adds 1% to s EPS. Jonathan Ratner