Israeli Investors Eye Companies Poised to Benefit From Stronger Shekel

Following the 2022 Israeli elections, certain stocks saw significant gains, with Carmel Corp. rising 6.4% and Caror up 5%. These increases were attributed to expectations that the incoming government, led by Benjamin Netanyahu, would repeal the sweetened beverage tax. Max Stock also experienced a rise amid anticipation of a tax cancellation on disposable utensils. Investors reacted to potential economic policy shifts rather than waiting for official government decisions.

Four years later, with preliminary results from the 2026 elections emerging, investors are again looking for companies that could benefit from anticipated economic changes. A key factor influencing corporate profits is the continued strengthening of the Israeli shekel. For companies importing goods in dollars and euros and selling them in shekels, a stronger shekel presents an opportunity to improve profit margins even without increased sales volume. The dollar recently fell to around 3.02 shekels, and the euro traded near 3.37 shekels.

Max Stock, a significant importer, has seen its gross profit margin increase to 46.3% in the first half of 2026, up from 43% in the same period last year, partly due to the stronger shekel. However, the company also recorded a loss of approximately 31.6 million shekels from dollar hedging transactions, compared to 10.9 million shekels a year prior, as hedging strategies designed to protect against dollar appreciation became a source of accounting losses when the dollar weakened. Despite this, Max Stock's net profit surged 44.5% to 85.8 million shekels in the first half.

Delta Israel, which operates fashion and lingerie chains, also benefited from the stronger shekel, with the currency's appreciation contributing about 6 million shekels to its operating profit change in the first quarter of 2026. This illustrates how a weaker cost of imported goods can improve profitability even without sales growth. However, Delta Israel's net profit decreased by 44% in the first quarter, indicating that the shekel's strength was insufficient to offset other negative factors.

Fox and Electra Consumer Products are two other companies that may gain from a continued stronger shekel. Fox imports a substantial portion of its goods in dollars and euros while earning revenue in shekels. However, the company hedges its cash flow exposure, so currency fluctuations may not have an immediate impact. Electra Consumer Products, which imports electrical appliances and other goods, primarily pays suppliers in dollars and euros. While a stronger shekel could lower procurement costs, hedging and industry competition affect the ability to translate these savings into improved profitability. Diplomat, a consumer goods importer and distributor, is also exposed to currency fluctuations but utilizes exchange rate locking mechanisms and commercial agreements with international suppliers that may mitigate the direct impact of shekel appreciation.