What are the effects of a weakening dollar on stocks?

The question is probably floating around everywhere,

“How do I protect myself from a weakening dollar via the stock market?”

“What stocks should I buy to benefit from the falling dollar?”

“What stocks should I avoid to shield myself from the dollar’s demise?”

It's scary isn't it?

The answer can be summed up into a few main points:

1. Buy globally diversified companies – companies that have sales across the globe in a variety of currencies will be buffered against the fall of the US dollar. A few examples are:
   1. Coca Cola (KO) – The world’s largest beverage company. Sells in over 200 countries an average of 1.6 billion items per day [1].
   2. Exxon Mobile (XOM) – The world’s largest publicly traded oil and gas company, operates worldwide.
   3. Dow Chemical (DOW) – Worldwide manufacturer of chemicals and chemical products. Recently purchased Rohm and Haas Company, and operates in 35 countries.
2. Avoid dollar dependent stocks such as:
   1. Family Dollar Stores (FDO) – Operates a chain of more than 6,500 general merchandise retail discount stores in 44 states. It is possible, given the economic downturn, that the company might do better than expected but given the decrease in the dollar’s value and the increasing pressure to revalue the Chinese currency it is better to avoid.
   2. Target Corporation (TGT) – With prices already low in order to survive against competitor, Walmart, Target is a prime target for extinction given a poor economy and lower value of the dollar.
   3. UAL Coporation (UAUA) – UAL who controls United Airlines will be severely hit as oil trades low in USD and air travel lessens.

[1] http://www.thecoca-colacompany.com/ourcompany/pdf/Company_Fact_Sheet.pdf