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Who's exposed to Europe? Add to ...

Worried about what Europe is going to do to your investment portfolio? Tobias Levkovich, chief U.S. equity strategist at Citigroup, crunched some numbers to find out the degree to which companies in the S&P 500 are exposed to the region, and the results don't look pretty.

He estimates that sales to Europe account for about 9 per cent of S&P 500 revenue. And with the euro looking soft against the U.S. dollar, the impact on U.S. earnings in the second half of the year could be substantial if the European solution to its debt crisis also includes austerity measures that slow the economy.

"As we have highlighted in the past, the equity market has a very strong correlation with earnings trends and any pullback in the direction of 2H10 EPS [second half of the year, earnings per share]due to seasonal as well as structural drivers may restrain equity markets from rising sequentially," Mr. Levkovich said in a note.

"Thus, while it may be easy to hope that things work out well, it may be more thoughtful to be circumspect if profits are affected by the turmoil in Europe."

He also looked at which companies within the S&P 500 had the greatest exposure to Europe, and found some interesting results. For example, First Solar Inc. generates an amazing 77 per cent of its sales from Germany and France.

"Keep in mind that more than half of the world's solar energy is generated in Germany, but First Solar could face additional headwinds as Germany and France slash feed-in tariffs for solar power," he said.

Among some of the other top names: Philip Morris International Inc. has a 68 per cent exposure to Europe, while Harman International Industries Inc. has a 62 per cent exposure. Meanwhile, McDonald's Corp. has a 41 per cent exposure, Dow Chemical has a 34 per cent exposure and Ford Motor Co. has a 32 per cent exposure.

Mr. Levkovich also broke down the top 50 exposed names by subindex, and found that consumer discretionary stocks, health care stocks, financials and information technology stocks had the greatest exposure to Europe, ranging between 14 per cent and 18 per cent. Energy stocks and consumer staples had the least, at 6 per cent each.

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