Revealed: 3 big ASX winners from a US rate hike

Catapult Group International Ltd (ASX:CAT) is one of three ASX shares which I think will benefit if the Fed raises rates in December. Here's why…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite interest rates being at record low levels, the Australian dollar has managed to frustrate the Reserve Bank this year by remaining relatively strong. Currently the Australia dollar is fetching 76 US cents, over US 8 cents higher than the start of the year.

But all this could be about to change with the Federal Reserve looking likely to raise US interest rates in December. According to Bloomberg there is a 70% chance of a rate hike at the December meeting.

As the Fed raises rates the US dollar should strengthen, causing the Australian dollar to weaken. Whilst this isn't great news for companies like Nick Scali Limited (ASX: NCK) and Reject Shop Ltd (ASX: TRS) who import their goods, the following three companies are likely to get a boost.

Catapult Group International Ltd (ASX: CAT)

In FY 2016 sports analytics company Catapult saw revenue in its US segment increase over 47% to $6.3 million. This means the segment is now the company's largest and accounts for over 36% of total company revenue. The recent acquisition of US-based XOS Digital is expected to further bolster US revenues in FY 2017 and beyond. As a result I believe Catapult would be a big winner from a weak Australian dollar.

Cochlear Limited (ASX: COH)

The implantable hearing solutions provider is another company with significant exposure to the U.S. market. In the most recent financial year Cochlear reported sales in the Americas of $519.7 million, equating to approximately 45% of total company sales. Sales in the region increased 12% year on year on a constant currency basis, but thanks to favourable currency movements sales in the Americas rose 29%.

Orora Ltd (ASX: ORA)

Packaging company Orora derived 49% of its total sales from the North American market in FY 2016 and pleasingly management is expecting strong organic growth next year from the region. At 19x estimated FY 2017's earnings I think Orora is a great buy and hold investment option. Not only does it provide growth, but the industry it operates in provides investors with strong defensive qualities in my opinion.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »