One of the most respected equity strategists on Wall Street is laying out exactly which U.S. stocks are exposed to euro risk -- and which can actually prosper if the European process fails to rescue the shared currency.
Thomas Lee of JPMorgan is highly respected for many reasons, including his ability to break down the noise and identify the calculus behind big swings in sentiment.
In this case, he is injecting some sanity into the unending and universal doom and gloom over Europe. He says a euro recession will have a limited impact on U.S. equity markets -- even if revenue from the euro zone slows 10%, that represents maybe an 0.75% decline in projected S&P 500 earnings.
This is big news, not only because many of the world's investors are heavily invested in the United States but because U.S. companies are still a key driver of global growth.
The United States represents 25% of global GDP and the SPY (quote) represents about 75% of publicly traded U.S. equity.
Whatever happens in Europe, if the impact on the S&P 500 is limited to less than 1% and China holds up, the world economy keeps working.
U.S. cyclical companies are a little more heavily exposed to Europe while defensive sectors like healthcare or utilities derive at best 4% from the region.
Lee has two lists. Large-cap U.S. companies with the least euro exposure include Seagate ( STX , quote ), VeriSign ( VRSN , quote ), Altera ( ALTR , quote ), SAIC ( SAI , quote ), Visa ( V , quote ), Starwood Hotels ( HOT , quote ), L-3 Communications ( LLL , quote ), Cummins ( CMI , quote ), Apollo Group ( APOL , quote ), Akamai ( AKAM , quote ), Motorola Solutions ( MSI , quote ), Raytheon ( RTN , quote ), the Gap ( GPS , quote ), Agrium ( AGU , quote ), Equifax ( EFX , quote ), KLA-Tencor ( KLAC , quote ), Lam Research ( LRCX , quote ), NVIDIA ( NVDA , quote ) and CNH Global ( CNH , quote ).
Stocks with the heaviest exposure to the euro zone: First Solar ( FSLR , quote ), PartnerRe ( PRE , quote ), Philip Morris ( PM , quote ), Owens-Illinois ( OI , quote ), Pall ( PLL , quote ), Molson Coors ( TAP , quote ), Mettler-Toledo ( MTD , quote ), Qiagen ( QGEN , quote ), Ansys ( ANSS , quote ), Biogen Idec ( BIIB , quote ), Marsh & McLennan ( MMC , quote ), Becton Dickinson ( BDX , quote ), Edwards Lifesciences ( EW , quote ), Illinois Tool Works ( ITW , quote ), Garmin ( GRMN , quote ), Coca-Cola Enterprises ( CCE , quote ), Waters Corp. ( WAT , quote ), Weight Watchers ( WTW , quote ), ExxonMobil ( XOM , quote ), Computer Sciences Corp. ( CSC , quote ), the Willis Group ( WSH , quote ), eBay ( EBAY , quote ) and Ford ( F , quote ).