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Two Ways: Online Titans Benefit from Weak Dollar

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Strengthen your portfolio in good times and bad.

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Earnings season is set to get in full gear this week, and a number of companies are likely to report significant sequential-revenue gains due to a quarter-on-quarter drop in the US dollar, so say analysts at investment bank Jefferies Group.

In a story on Barron's, the firm named online titans Google (GOOG), Amazon (AMZN), and eBay (EBAY) as benefiting the most from the favorable currency rates.

The weak dollar should contribute about $70 million to eBay's revenue and about $26 million to operating income.

With Amazon generating 45% of its revenues outside of North America, the company should see a $33 million increase to the top line resulting in less than a penny contribution to EPS.

Google has 53% of revenues coming from outside the US, but the firm says revenue gains aren't necessarily likely to translate into the bottom line given Google's neutral hedging strategy.

From the Bull Pen: One can't deny the continued strength in the S&P 500 with every dip being bought. Bulls can use the SPY ETF. A collar strategy (long stock with put protection, and short calls) could be one method, or one can simply use a traditional sell stop near 105-106.

From the Bear Cave: There will come a point when the weak dollar/ buy stocks trade ends. A sell-off in treasuries could spark that sentiment. Bears are watching the follow-through strength in the ultra-short 20+ year ETF (TBT). In the short term, one can set a sell stop 2% below entry.

A Quick Check Around the World

Asian trading closed with the Nikkei (Closed)%, India 2.31%, Hang Seng -0.93%, Shanghai -0.59%, and Taiwan 0.37%.

Across the pond, we see the FTSE 1.25%, CAC 1.22%, DAX 1.43%

As of 8:10 a.m. EST, S&P Futures are trading +7.25 to 1075.00 and Nasdaq futures are +10.25 to 1736.00.

A Look at Commodities

Over in commodities, crude oil is +1.25 to 73.02 while gold is +7.30 to 1056.00 this morning. Silver is +0.23 to 17.92 and copper +1.700 to 285.50.

The dollar index is -0.2500 to 76.3700.

Not much on the radar today, but click here for the rest of the week's events.

Welcome back. Good luck and have a great day!

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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