America first? Not exactly for these hot stocks

U.S. stocks with the best returns doing most sales overseas

The setting for the story about the USA’s most successful stocks this year is not in America, but overseas.

As President Trump drives home his “America First” message, U.S. stocks that get 50% or more of their sales revenue outside the country are delivering far bigger returns than American companies that ring up 90 cents out of every dollar in sales domestically.

Companies with a big overseas presence are up more than 19% this year, according to Bespoke Investment Group, citing data through Sept. 25. That’s far ahead of the 4.5% return of stocks of companies that get 90% of their revenue within U.S. borders.

What’s causing U.S.-centric companies to perform so poorly? The same forces, it turns out, that have catapulted large multinational American companies to the top of the performance charts, Wall Street pros say. Here’s the rap sheet on U.S.-focused stocks:

Blame the greenback.

The dollar has been in freefall this year. It is down more than

9% against a basket of foreign currencies, including the Japanese yen and euro.

And what’s bad for the U.S. currency is very good for companies that sell stuff abroad.

The reason? A weak dollar lowers the cost of U.S.-made goods purchased abroad by foreigners. And the more affordable products made by Apple, Nvidia, McDonald’s, Estée Lauder and Caterpillar are, the more consumers and businesses based abroad can buy. And that helps their stock prices, which are all up more than 28% this year, with Nvidia leading the charge with a 60% gain.

“It’s 100% related to the dollar,” says Paul Hickey, co-founder of Bespoke Investment Group, a New York-based research firm.

A weak dollar provides a tailwind for international profits. That same benefit, however, is not available to U.S. companies that get most of their sales at

home, such as auto parts retailers Advance Auto Parts, down 42% in 2017 through Sept. 25, or department stores such as Macy’s, down 39%.

Blame Amazon. A list of the domestic stocks that have suffered year-to-date declines of more than 10% and as much as 45% include a who’s-who list of retailers, such as Macy’s, Target and AutoZone and grocery stores such as Kroger that have been hurt by the rapid shift to online shopping and the domination of Amazon.

Blame Trump. The Republican-controlled Congress was supposed to pass Trump’s America First agenda, which included plans to invest big in infrastruc- ture projects and lower corporate taxes. But those policies haven’t been passed.

“The lack of domestic stimulus via infrastructure spending and tax cuts have hurt stocks more heavily focused on the domestic economy,” says Lindsey Bell, investment strategist at CFRA Research, a New York-based Wall Street firm.

Blame oil. The oil market is still suffering from oversupply, says Howard Silverblatt, senior index analyst at S&P Dow Jones Indexes.

A barrel of U.S. produced crude is now trading around $52 per barrel. The energy sector is currently the worst-performing sector in the Standard & Poor’s 500 stock index. It is down 9% this year.

“It’s 100% related to the dollar.” Paul Hickey, co-founder, Bespoke Investment Group