MM Feb 13

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Shares of U.S. Airlines, Shippers and Utilities will Benefit from a Higher U.S. Dollar

Feb 13

For the week ended February 12, 2010, the shares of airline companies advanced and several hit 52 week highs even though the shares of many stocks were down for the week. At the week’s close Southwest (NYSE:LUV) closed at its 52 week high. Airline shares are rallying for two big reasons. The first is that a higher dollar means lower fuel prices and the second is that a higher dollar means that there will be a pick up in air travel abroad. The shares of those industries and companies who benefit from a higher U.S. Dollar are poised to rally since the U.S. Dollar closed the week at a nine month high versus the Euro and has increased by over 10% against the currency on the other side of the pond since December of 2009.

The price action of the airline stocks is confirming the sirens, an article, “The Damage to the Euro has been Done” and a blog, “A Rising U.S. Dollar will Hammer the Stock Market”) that I have been sounding that the rising dollar has put the U.S. stock market on the precipice of another significant downturn in the coming weeks and months. The other industries that will also benefit are all of those industries and companies, which participate in the U.S. Transportation sector. They include air freighters such as Fedex (NYSE:FDX), etc., and truckers which include J.B. Hunt (NASDAQ:JBHT), etc. Utility companies will also benefit from lower energy prices, but to a much lesser degree.

The industries, which have the most to lose in a rising dollar environment are those who are involved in Metals and Mining and companies such as Alcoa and U.S. Steel, etc. All fossil fuel industries, which include, International Oil, Domestic Oil, Natural Gas, Oil Services and Coal will suffer greatly from a higher Dollar.

There are three companies that I am currently recommending which will benefit from a higher U.S. Dollar. They are in three separate industries; Airlines, Utilities and Shipping. Information on each of them is available at www.bearmarkettracker.com

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