Despite its own volatility in 2024, the US dollar is ending the year on a high note. There are several reasons for the dollar’s strength, not the least of which is enthusiasm for the new Trump administration’s pro-growth policies.
However, much of the dollar’s strength can be expressed by saying that the United States is the best home in a bad economic neighborhood. That is, the US economy exceeds the economy of the G10 countries.
That’s a bullish outlook for the 10-year Treasury note, but it could be a headwind for some stocks in 2025. A strong dollar coupled with persistent inflation could keep the Federal Reserve from cutting interest rates. In fact, this combination could cause interest rates to rise at some point.
But this article is about opportunities, not obstacles. So let’s look at three stocks that are likely to benefit from a stronger US dollar in 2025.
Home Depot has a history of growth, even if tariffs get in the way
Home Depot today
Home Depot
As of 01/03/2025 17:45 Eastern
- 52 week range
- $323.77
▼
$439.37
- Dividend yield
- 2.31%
- P/E ratio
- 26.44
- Target price
- $426.00
Home Depot New York Stock Exchange: HDis one of the country’s leading importers. A stronger dollar will make imports cheaper, boosting the home goods giant’s profits. However, the specter of tariffs looms over this story. No one knows exactly what the scope of President-elect Trump’s tariff policy will be, but it’s certainly something to keep an eye on.
On the other hand, it only took a small drop in interest rates for investors to see growth in the housing market. But even if current homeowners aren’t ready to put their homes on the market, the supply side of the equation is likely to improve. The residential construction sector was strong in 2024, and this growth is likely to continue in 2025.
HD shares are up 14% this year. That’s good for most years, but that’s nearly half the gain for the S&P 500. Analysts have a $426 price target for HD stock. This is approximately 8% growth. However, some analysts raised their price targets following the company’s earnings report in November.
This growth comes in addition to the dividend, which has grown at an average rate of more than 11% over the past three years and currently pays $9 per share per year.
Higher prices benefit this discount retailer
TJX Companies Today
TJX Companies
As of 01/03/2025 17:45 Eastern
- 52 week range
- $91.31
▼
$128.00
- Dividend yield
- 1.24%
- P/E ratio
- 28.41
- Target price
- $130.89
It was a mixed bag for retail promotions in 2024, but one group that stands out is the stocks of off-price retailers like TJX, Inc. New York Stock Exchange: TJX. These companies always have a loyal customer base, but they really stand out when consumers are looking for value.
This usually happens when the dollar is stronger because it causes inflation. Tariffs and trade wars aside, it will take time to get a handle on the current inflation in the economy. As a consumer, you know that prices may rise quickly, but they don’t fall as quickly, if at all. In most cases, the economy must grow enough to allow consumer incomes to rise to a level where they can absorb higher prices.
However, while inflation is a concern for consumers, it is an opportunity for investors. When it comes to TJX stock, all you have to do is follow the customers. The pursuit of value directly impacts a company’s value proposition. That’s why analysts are raising their price targets for TJX stock, even though it’s already up 32% for 2024.
This defense stockpile will outlive the DOGE plan
Lockheed Martin today
Lockheed Martin
As of 01/03/2025 17:45 Eastern
- 52 week range
- $413.92
▼
$618.95
- Dividend yield
- 2.74%
- P/E ratio
- 17.44
- Target price
- $605.36
Even before the announcement that President-elect Trump would create the Department of Government Effectiveness (DOGE), many lawmakers viewed the nation’s massive defense budget as a place where cuts might be needed.
This might seem bearish for defense stocks such as Lockheed Martin Corporation. New York Stock Exchange: LMT. However, Lockheed is not just another defense company. It is the nation’s leading defense contractor, which means the company will have many more government contracts to come. The company also has contracts with other foreign governments, and the revenue from these contracts will be more valuable as the revenue will be converted into US dollars.
In addition, the company is likely to benefit from lower production costs due to cheaper imported materials. Ideally, this will allow Lockheed to offer more competitive prices and win additional contracts.
Analysts have a consensus target price for LMT shares of $612.29, which is 25% above the closing price on December 27, 2024.
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