The U.S. Dollar Index is down 10% in the first half of 2025. That’s the weakest year-to-date performance since 1972, when the United States moved away from the gold standard.
Several interrelated factors are dragging the dollar down. A major one is a chaotic trade and tariff policy that is still a work in progress. At the same time, there are growing concerns about the country’s public debt—concerns that will only get stronger if Congress passes the Trump administration’s “big, beautiful bill,” which will, at least on paper, increase the national debt by trillions of dollars over the next decade.
Commodity prices are also on the rise, and rising commodity prices tend to strengthen the currencies of major exporters like Canada and Australia. This in turn puts additional pressure on the U.S. dollar. Plus, Europe and Asia are rebounding quickly from last year's slowdown, causing a flight to safety to flow to foreign equities and bonds.
Despite all the negativity surrounding the U.S. dollar, the S&P 500 hit an all-time high at the end of June. Many market analysts believe that many issues serving as headwinds today (tariffs, inflation, uncertainty on tax policy) will turn into tailwinds for gross domestic product (GDP) in the second half of the year.
Keeping all this in mind, here are three stocks that are likely to perform well while the dollar is weak and are also poised for a recovery right here in the United States.
Caterpillar: Global Demand and Onshoring Drive Growth
Caterpillar (NYSE: CAT) stands out as a prime beneficiary of a weaker U.S. dollar. With more than half of its revenue generated from international markets, the company gains when foreign earnings convert into stronger dollar terms. The company also benefits directly from rising commodity prices because its heavy machinery is heavily used in mining operations.
But there are also domestic catalysts at play with Caterpillar. Many companies have responded to the Trump administration’s calls to onshore their manufacturing, translating into increased demand for industrial equipment. These commitments, along with capital already committed to build data centers, will be bullish for Caterpillar.
That said, CAT stock is up over 11% in the last month and is now trading above the consensus price target of the analysts tracked by MarketBeat. The stock also has a forward price-to-earnings (P/E) ratio of over 19x, which makes it expensive compared to its historical levels as well as other industrial stocks.
While investors may want to wait for a little pullback, they may not want to wait too long. On June 24, Citigroup raised its price target for CAT stock from $370 to $420.
Procter & Gamble: A Weak Dollar Lifts International Sales
The Procter & Gamble Company (NYSE: PG) is similar to Caterpillar in that about 50% of the company’s revenue comes from overseas. That explains why its earnings per share (EPS) remain slightly higher year-over-year (YOY) even as its revenue is under pressure.
Consumer staples stocks in the United States have struggled lately. That’s because the pricing power that many companies enjoyed in 2020 and 2021 has turned into a liability as higher-for-longer interest rates and sticky inflation has caused consumers to be more discerning about how they spend their dollars.
PG stock is down about 5.4% through the first half of 2025. However, even at a forward P/E ratio of around 24x, the stock is still trading at a discount to itself. Analysts project EPS growth of around 6% over the next year, and even that forecast may underestimate potential gains if U.S. economic conditions improve in the second half of the year.
IBM: AI and Quantum Bets Pay Off Abroad
At the midpoint of 2025, IBM (NYSE: IBM) may be ready to win the title of comeback stock of the year—or maybe of the decade. IBM stock is up 33% in 2025, and Wedbush recently raised its price target from $300 to $325. That would be a gain of over 10% for investors.
The company's resurgence is largely driven by its ability to make artificial intelligence (AI) practical for large enterprises, particularly agentic AI. Like the other stocks on this list, IBM also generates significant revenue from international customers.
Another key driver is IBM’s long-standing investment in the quantum computing space. This has been a targeted bet for IBM over several years that is paying off as quantum computing becomes a reality.
The outperformance of IBM stock in 2025 makes it expensive based on many metrics. For example, its earnings yield of 2.07% is lower than its dividend yield, which suggests that IBM is paying out more in dividends than it earns in profit relative to its stock price. But IBM's dividend is backed by the company’s free cash flow (FCF) ratio, which is higher than its historical averages.