For years, the prevailing wisdom, especially as the dollar strengthened, was to focus on buying stocks with more exposure to the United States for sales and revenues than overseas. However, the tide may be shifting for a number of reasons, not the least of which is that the consistent drone of lousy economic news and data from abroad may be ready to turn some in 2020. One top Wall Street analyst thinks it’s time to look for stocks with foreign exposure.

Top-notch Jefferies market strategist Steven DeSanctis says there are numerous reasons for investors to look overseas. In a new research report, he cites some specifics:

We shift our preference to favor names with more overseas exposure given our view that economic news outside the US should improve over the next few months, resulting in a softer dollar. In addition, we anticipate an earnings recovery for stocks with foreign exposure in the fourth quarter and in 2020 estimated (foreign exposed names should outgrow domestic) and point out that revisions appear to have bottomed. Valuations have also become attractive on an absolute basis, now trading below the long-term average.

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The Jefferies team screened the firm’s Buy-rated companies with market caps between $2 billion and $30 billion with foreign sales greater than 25%, and return on equity greater than 12%. Over a dozen companies matched the metrics, and here we picked five of the bigger and more well-known companies.

Ciena

This company has had a very up and down 52 weeks and frequently has been the subject of takeover rumors. Ciena Corp. (NASDAQ: CIEN) is a vendor for high-capacity optical transport and Ethernet switching equipment to carriers, enterprises, cable operators and governments. It specializes in transitioning legacy communications networks to converged, next-generation architectures capable of efficiently delivering a broader mix of high bandwidth services.

The company’s Converged Packet Optical segment offers networking solutions optimized for the convergence of coherent optical transport, Optical Transport Network (OTN) switching and packet switching. Its products comprise the 6500 Packet-Optical Platform, 5430 Reconfigurable Switching System, CoreDirector Multiservice Optical Switches and OTN configuration for the 5410 Reconfigurable Switching System.

The Jefferies price target for the stock is $55, and the Wall Street consensus target was last seen at $50.22. The final trade on Friday came in at $38.45 a share.

Eastman Chemical

This stock has rallied smartly off the August lows but is still way below highs printed back in the spring. Eastman Chemical Co. (NYSE: EMN) engages in the provision of specialty chemicals. It operates through the following segments.

The Additives and Functional Products segment includes chemicals for products in the transportation, consumables, building and construction, animal nutrition, crop protection, energy, personal and home care, and other markets. The Fiber segment offers cellulose acetate tow for use in filtration media, primarily cigarette filters.

The Advanced Materials segment of Eastman Chemical produces and markets its polymers, films and plastics with differentiated performance properties for value-added end uses in transportation, consumables, building and construction, durable goods, and health and wellness markets.

The Chemical Intermediates segment consists of large scale and vertical integration from the cellulose and acetyl, olefins and alkylamines streams to support operating segments with advantaged cost positions.

Investors in Eastman Chemical receive a solid 3.4% dividend. The Jefferies team has an $87 price objective, near the posted consensus target price of $85.75. The shares were last seen trading at $73.09 apiece.

This online travel leader could be poised for a potential big third-quarter report. Expedia Inc. (NASDAQ: EXPE) is the leading internet travel pure-play with exposure to online travel in the United States, Europe and Asia. The company’s portfolio of brands includes Expedia, Orbitz, HomeAway, Travelocity, Hotels.com, Trivago, Egencia, Hotwire, Wotif, Venere and Classic Vacations.

Top analysts see it as a story of improving execution, and they also think that the company finally is starting to match Priceline’s growth metrics. The company has raised the dividend and is buying back stock, and both are shareholder-friendly actions.

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The Jefferies analysts noted this recently when discussing Expedia’s outlook for the third-quarter results:

We expect investors to focus on Vrbo and trivago, looking for improving trends, along with potential commentary on expectations beyond fourth quarter 2019 against softening global macro trends. We believe that continued strength in Core OTA, return to growth for trivago and favorable geo exposure should help top-line growth in the second half while operational streamlining and remaining marketing spend efficiencies should still help margins.

Expedia offers investors a 1.0% dividend. The $170 Jefferies target price for the stock is well above the $149.10 consensus price target. The stock closed most recently at $136.03 per share.

Kennametal

This somewhat larger mid-cap company looks like s solid value play now. Kennametal Inc. (NYSE: KMT) develops and applies tungsten carbides, ceramics, super-hard materials and solutions for use in metal cutting and mission-critical wear applications to combat extreme conditions related with wear fatigue, corrosion and high temperatures worldwide.

The company’s product offering includes a selection of standard and customized technologies for metalworking applications, such as turning, milling, hole making, tooling systems and services for manufacturers of transportation vehicles and components, machine tools, and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation.

Kennametal investors receive a 2.72% dividend. Jefferies has set a stunning $50 price target. That compares to the much lower consensus target of $36.32, as well as the most recent closing price of $30.71.

Lear

This stock also has had ups and downs in 2019, and it now offers a solid entry point. Lear Corp. (NYSE: LEA) is a supplier of automotive seating and electrical systems. The company generates approximately 75% of its revenue from its seating business, with the remainder attributable to electrical systems.

The company has made significant strides in its restructuring efforts since emerging from bankruptcy, and it is the second-largest seating supplier globally. Lear continues to target 4% seating outgrowth and sees global share shifting from 23% to 28% over time. Electrification, connectivity and active safety proliferation should help the segment support management’s long-term 6% to 8% outgrowth target.

Investors in Lear are paid a 2.50% dividend. The Jefferies price objective is $151. The consensus target was last seen at $135.69, and the stock ended last week trading at $119.87 a share.

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While it probably makes sense to continue to focus on companies with big U.S. exposure, as our economy is still far and away the best in the world, adding some stocks that do have foreign exposure is a very solid idea now.

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