3 stocks to buy to benefit from a lower Australian dollar

3 stocks to buy to benefit from a lower Australian dollar

The Australian dollar has finally dipped below the US$0.90 mark following a prolonged period of near parity with the US dollar. The Australian dollar is currently trading at US$0.87. Some analysts are predicting the Australian dollar to fall by another 10%. Therefore, one of the best ways for investors to profit from a falling Australian dollar is to consider purchasing Australian-listed companies that earn a significant proportion of their earnings offshore. 

By purchasing quality Australian companies with offshore earnings, investors will benefit from not only improved earnings as a result of a lower Australian dollar, but also from growth in the underlying business. This is opposed to trading the currency directly, which can be notoriously difficult.

The three companies outlined below are all quality companies whose earnings are set to benefit from a lower Australian dollar.

Cochlear Limited (ASX: COH)

Cochlear is a leading manufacturer of hearing implants. Cochlear has an impressive reputation for technological innovation and reliability in a highly specialised medical niche, and also has a strong intellectual property position over its implants. Cochlear earns approximately 40% of revenue in North America and 45% in the EMEA region, and therefore will benefit once earnings are converted back into Australian dollars.

Cochlear has some long-term structural tailwinds behind it which will see the company be a major beneficiary. These tailwinds include growing demand for its implants from emerging markets, particularly China, and also increasing government healthcare spend in the developed world.

At first glance, the current share price of $69 looks expensive, however the company has strong sales momentum behind it and may suit long-term investors.

BHP Billiton Limited (ASX: BHP)

Australian-listed mining companies will benefit as commodity prices, such as iron ore and petroleum costs, are priced in U.S. dollars. BHP has estimated that each one cent change in the AUD/USD exchange rate has a $100 million impact on net profits. The share price of BHP has fallen from $40 down to $33 over the past six months as a result of a rapidly falling iron-ore price.

Investors may want to consider the long-term iron ore fundamentals around a higher long-term iron ore price, before purchasing shares in BHP.

ResMed Inc. (CHESS) (ASX: RMD)

ResMed is a leader in the treatment of sleep apnea, and with the potential addressable market for ResMed forecast to be huge, especially in the United States, Resmed will be a long-term beneficiary. ResMed derives the majority of its revenue in the United States and will benefit from an increasing U.S. dollar. For the 2014 financial year, Resmed derived approximately half of its revenue from its North and Latin American divisions.

Furthermore, the current share price offers good value, making now a great time to consider buying shares. 

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