ABNB, HD and DOW stocks benefit from dollar strength in 2025 – Magic Post

How does the movement in the dollar index affect your investment portfolio?

This is a question that many individual investors ignore, even though currency shifts apply across every asset class. Whether you own stocks, bonds or commodities, the strength of the US dollar plays a major role in pricing, spreads and global capital flows.

In 2025, this question becomes even more urgent.

For most of the year, hedge funds have been selling the US dollar aggressively, betting that slowing growth and geopolitical risks would drag it lower. Now they’re dismantling those positions. Why?

The shift in global risk sentiment – ​​fueled by rising tariffs, geopolitical uncertainty, and rising gold prices – is prompting more and more international investors to use the dollar as a potential haven for their capital. Hedge funds are now reversing course, helping the dollar index rise 3% this month alone.

This sharp move is creating opportunities in US companies with significant international exposure, e.g Airbnb Inc Nasdaq: ABNB, Home Depot Company New York Stock Exchange: HDand Dow company New York Stock Exchange: Dow Jones Indexwhich could see margin expansion, demand rebound, and free cash flow accelerate as this trend emerges.

And if hedge funds are any indication, the rotation has already begun.

Airbnb: Riding the Comeback of International Travel

Airbnb operates in more than 220 countries and territories, and a significant share of its revenue comes from non-U.S. listings. By some estimates, more than half of Airbnb’s revenue is generated outside the United States, giving the company tangible exposure to the dynamics of cross-border travel and currency fluctuations.

A stronger dollar could help drive international travel in two ways: by encouraging more Americans to travel abroad, and by making travel-related services priced in other currencies more attractive to American travelers. It also has indirect benefits such as lower operating costs in international markets and foreign exchange gains from cross-currency transactions.

Airlines are already seeing early signs of a travel recovery. Delta Airlines Serageldin: D It recently reported an increase in revenue for its transatlantic unit in the third quarter, indicating a broader rebound in discretionary spending.

Wall Street appears to agree, as the consensus price target among analysts has been set at $141.81 for ABNB stock, implying an upside of 19.3% from today’s prices. Mizuho’s Lloyd Walmsley recently went further, initiating coverage with an Outperform rating and a $151 price target, suggesting a potential upside of 27%.

Institutional investors appear to be taking positions early. Assenagon Asset Management increased its holdings in Airbnb by 56.7% in October, bringing their total to $171.8 million. The move may reflect the hedge fund’s broader thesis focused on dollar-driven travel demand.

Home Depot: Imports are getting cheaper

In a high-dollar environment, Home Depot could quietly become a margin expansion story. As a major importer of goods and materials, Home Depot’s cost of goods sold falls when the dollar strengthens — and these savings can flow directly to its bottom line.

The strength of the dollar also works to enhance morale and purchasing power among local consumers, which may lead to the unfreezing of some self-employed projects that rely on Home Depot products.

This combination – lower input costs and higher spending – sets up Home Depot for stronger gross margins and earnings per share in the coming quarters. Betting on this outcome, Wall Street analysts maintain the consensus target price at $435.42, indicating a potential upside of 14.8%.

This confidence persists despite Home Depot’s one-month stock price decline of 10.4%, suggesting the bottom may be near. Given the improved risk-reward ratio in this setup, Wolfe Research’s Spencer Hanus found enough reason to initiate coverage on Home Depot with an Outperform rating and a $497 price target, implying a 31% upside.

Dow: Free cash flow is the quiet catalyst

The Dow Jones stock is down 40% from its 52-week high, creating a wildly asymmetric risk-reward ratio for buyers. But how can a stronger dollar help a company like Dow Jones?

The chemical giant relies heavily on capital expenditures and commodity pricing, but a key metric to watch is free cash flow conversion, or how efficiently the company converts revenue into usable capital. As the value of the dollar rises, input costs – including internationally priced materials and transportation – tend to fall. If Dow can reduce spending on inventory and logistics, its cash flow margins could improve significantly, even without a significant increase in revenue.

Wall Street analysts understand this dynamic well, so they have maintained a consensus price target of $29.63 for the Dow Jones stock. Despite indicating a 36% upside, the number is still well below the company’s 52-week high of $53.83.

Before you consider Airbnb, you’ll want to hear this.

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