Optimistic? Here Are the Companies That Might Benefit From a Euro Recovery

Optimistic? Here Are the Companies That Might Benefit From a Euro Recovery

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It seems living in one of the strongest EU nations may alter one's perspective, because while much of the world is waiting for some sort of inevitable EU collapse, 78% of Germans are convinced the euro will survive.

The poll of 1,278 people was conducted by the Forschungsgruppe Wahlen institute between Tuesday and Thursday, and was released to the public on Friday morning.

According to AP, the poll shows nearly four in five Germans believe the euro will survive and more than half think Chancellor Angela Merkel is doing a good job of handling Europe's debt crisis. The euro sentiment is the same as a year ago despite increasing poor prospects for Italy and Greece.

However, "that is a significant shift from a similar poll in early October, which found Germans equally divided over Merkel, with 45 percent approving of her management and 46 percent disapproving."

Given the gloomy headlines plaguing the newspaper and Internet alike, it's hard to believe such an encouraging statistic. Could it be possible that Germany, which its strong economy, solid finances, and proximity to the heart of the action, is more in tune with the situation than foreign observers?

Investing Ideas: List of Stocks That Might Benefit From a Euro Recovery

So, assuming the Europeans can get their act together, which companies stand to benefit from euro strength?

For ideas, we went back in time, and collected price data on thousands of stocks. We identified the companies that performed best during times of euro currency strength.

The time intervals we used for our calculation (i.e. time intervals when the Euro gained strength):

11/07/2005 and 07/14/2008
11/17/2008 to 11/23/2009
06/01/2010 and 04/25/2011

All of the names mentioned below outperformed the market during these three time periods. Of course, past performance is no guarantee of future results, so only use this list as a starting point for your own analysis.

History suggests these companies do well in times of a rising euro currency. Do you think history will repeat itself?

 

1. Dresser-Rand Group Inc. (DRC, Earnings, Analysts, Financials): Engages in the design, manufacture, sale, and servicing of centrifugal and reciprocating compressors, gas and steam turbines, gas expanders, and associated control panels primarily to the oil, gas, chemical, petrochemical, process, power, military, and other industries worldwide. Between 11/07/2005 and 07/14/2008: Price changed from $22.66 to $36.62, a price return of 61.61% (alpha of 61.16%). Between 11/17/2008 to 11/23/2009: Price changed from $17.34 to $29.29, a price return of 68.92% (alpha of 38.88%). Between 06/01/2010 and 04/25/2011: Price changed from $31.23 to $53.07, a price return of 69.93% (alpha of 45.23%). [Average Alpha: 48.42%]

 

2. Syntel, Inc. (SYNT, Earnings, Analysts, Financials): Provides information technology (IT) and knowledge process outsourcing (KPO) services worldwide. Between 11/07/2005 and 07/14/2008: Price changed from $18.86 to $30.41, a price return of 61.24% (alpha of 60.79%). Between 11/17/2008 to 11/23/2009: Price changed from $22.72 to $39.07, a price return of 71.96% (alpha of 41.93%). Between 06/01/2010 and 04/25/2011: Price changed from $31.73 to $52.4, a price return of 65.14% (alpha of 40.44%). [Average Alpha: 47.72%]

 

3. Littelfuse Inc. (LFUS, Earnings, Analysts, Financials): Designs, manufactures, and sells circuit protection devices for use in the automotive, electronic, and electrical markets in the Americas, Europe, and the Asia-Pacific. Between 11/07/2005 and 07/14/2008: Price changed from $22.2 to $30.19, a price return of 35.99% (alpha of 35.54%). Between 11/17/2008 to 11/23/2009: Price changed from $15.3 to $27.99, a price return of 82.94% (alpha of 52.91%). Between 06/01/2010 and 04/25/2011: Price changed from $35.4 to $59.65, a price return of 68.5% (alpha of 43.8%). [Average Alpha: 44.08%]

 

4. Terex Corp. (TEX, Earnings, Analysts, Financials): Terex Corporation manufactures and markets machinery products, equipment, and related replacement parts and components for construction, quarrying, mining, shipping, transportation, refining, energy, and utility industries. Between 11/07/2005 and 07/14/2008: Price changed from $27.85 to $43.56, a price return of 56.41% (alpha of 55.96%). Between 11/17/2008 to 11/23/2009: Price changed from $11.77 to $19.73, a price return of 67.63% (alpha of 37.6%). Between 06/01/2010 and 04/25/2011: Price changed from $21.25 to $34.56, a price return of 62.64% (alpha of 37.93%). [Average Alpha: 43.83%]

 

5. Makita Corp. (MKTAY, Earnings, Analysts, Financials): Makita Corporation manufactures and sells a range of electric power tools worldwide. Between 11/07/2005 and 07/14/2008: Price changed from $24.89 to $35.19, a price return of 41.38% (alpha of 40.93%). Between 11/17/2008 to 11/23/2009: Price changed from $19.48 to $33.33, a price return of 71.1% (alpha of 41.07%). Between 06/01/2010 and 04/25/2011: Price changed from $27.32 to $45.39, a price return of 66.14% (alpha of 41.44%). [Average Alpha: 41.15%]

 

6. Anixter International Inc. (AXE, Earnings, Analysts, Financials): Distributes communications products, electrical wire and cable products, fasteners, and other small parts. Between 11/07/2005 and 07/14/2008: Price changed from $37.27 to $57.58, a price return of 54.49% (alpha of 54.05%). Between 11/17/2008 to 11/23/2009: Price changed from $27.56 to $45.1, a price return of 63.64% (alpha of 33.61%). Between 06/01/2010 and 04/25/2011: Price changed from $46.19 to $73.06, a price return of 58.17% (alpha of 33.47%). [Average Alpha: 40.37%]

 

7. Cubic Corporation (CUB, Earnings, Analysts, Financials): Engages in the design, development, manufacture, integration, installation, operation, maintenance, and support of defense electronics and transportation fare collection systems worldwide. Between 11/07/2005 and 07/14/2008: Price changed from $15.77 to $22.75, a price return of 44.26% (alpha of 43.81%). Between 11/17/2008 to 11/23/2009: Price changed from $20.96 to $35.38, a price return of 68.8% (alpha of 38.77%). Between 06/01/2010 and 04/25/2011: Price changed from $35.03 to $54.22, a price return of 54.78% (alpha of 30.07%). [Average Alpha: 37.55%]

 

8. MWI Veterinary Supply, Inc. (MWIV, Earnings, Analysts, Financials): Distributes animal health products to veterinarians in the United States and the United Kingdom. Between 11/07/2005 and 07/14/2008: Price changed from $23.13 to $32.87, a price return of 42.11% (alpha of 41.66%). Between 11/17/2008 to 11/23/2009: Price changed from $25.42 to $39.37, a price return of 54.88% (alpha of 24.85%). Between 06/01/2010 and 04/25/2011: Price changed from $47.63 to $80.49, a price return of 68.99% (alpha of 44.28%). [Average Alpha: 36.93%]

 

9. Eaton Corporation (ETN, Earnings, Analysts, Financials): Operates as a power management company worldwide. Between 11/07/2005 and 07/14/2008: Price changed from $25.42 to $35.61, a price return of 40.09% (alpha of 39.64%). Between 11/17/2008 to 11/23/2009: Price changed from $18.76 to $30.51, a price return of 62.63% (alpha of 32.6%). Between 06/01/2010 and 04/25/2011: Price changed from $32.68 to $52.47, a price return of 60.56% (alpha of 35.85%). [Average Alpha: 36.03%]

 

10. Estee Lauder Companies Inc. (EL, Earnings, Analysts, Financials): Engages in the manufacture, marketing, and sale of skin care, makeup, fragrance, and hair care products worldwide. Between 11/07/2005 and 07/14/2008: Price changed from $30.75 to $41.04, a price return of 33.46% (alpha of 33.01%). Between 11/17/2008 to 11/23/2009: Price changed from $28.5 to $47.26, a price return of 65.82% (alpha of 35.79%). Between 06/01/2010 and 04/25/2011: Price changed from $57.34 to $93.87, a price return of 63.71% (alpha of 39%). [Average Alpha: 35.94%]

 

(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA)

 

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2 Responses to “Optimistic? Here Are the Companies That Might Benefit From a Euro Recovery”

  1. Darrell X Johnson says:

    I want to work to something like Terex Corp. as I know a thing or two about mining and quarrying. I am planning to apply on this drilling company in my place as they have established a good name and credibility already. Just hoping for the best!

  2. more here says:

    I agree to what people believe. The poll shows nearly four in five Germans believe the euro will survive and more than half think Chancellor Angela Merkel is doing a good job of handling Europe's debt crisis. Anyways thanks a lot for the news.

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