Your instant 5-share portfolio for the falling Aussie dollar

Five stocks that should add value to your portfolio even as the dollar falls.

a woman

Over the past 12 months, we have seen remarkable gains on some of Australia’s largest corporations, including Telstra (ASX: TLS) and the big four banks as investors have sought out high yielding stocks – driving the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) up a total of 21%, despite the 5.1% retreat in May.

Other stocks have also heavily outperformed the market on the back of a strong Australian dollar. For instance, Flight Centre (ASX: FLT) has given shareholders returns of 122% in the past year, as Australians have taken advantage of cheaper international currencies for travel. However, the dollar has largely retreated from its high and is currently sitting below parity with the US dollar. Experts are predicting that its value could retreat to somewhere around 80 US cents within the next 12 months. As such, it seems appropriate to have a look at five companies that will likely benefit from the diminishing Aussie dollar.

Poker machine manufacturer Aristocrat Leisure (ASX: ALL) released its half-year report last week, announcing an 11.2% increase in net profit compared to the prior corresponding period, and expects its second half to be just as strong. Meanwhile, results from its US division were very pleasing, with sales and installations being a key driver behind its success (installations for the period grew by 8.5%). As the dollar loses its value, Aristocrat should see even heavier demand.

Coca-Cola Amatil (ASX: CCL) is one of Australia’s strongest companies with globally renowned brand names. Following a poor earnings forecast, the company’s shares plummeted and are currently sitting flat compared to their value 12 months ago. Amongst various other reasons, the company struggled to compete with imported goods due to the value of the $AU. With the value decreasing, sales are very likely to recover, which makes Coca-Cola even more mouth-watering at today’s price.

Whilst many of Australia’s blue chips have been the catalyst behind the market’s rally, analysts are suggesting the value of mining heavyweights BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) is quite attractive. Although the flailing value of iron ore is currently a concern, both companies rely heavily upon exports as a primary source of revenue, and as the exchange rate drops, demand will increase. It is well worth adding these two to your watch list (if they aren’t on there already) to wait for an even more attractive entry point.

QBE Insurance Group (ASX: QBE) is another company that is already benefiting from the lower Australian dollar, with shares now up 60% since the beginning of December. Shareholders have had to remain patient with their involvement in the company in recent years as the global financial crisis and numerous natural disasters deflated the company’s value significantly. However, those natural disasters have allowed the insurance giant to push its premiums up, which will result in higher revenues. Furthermore, with roughly 25% of its business being written in North America, the falling Australian dollar will likely continue to push shares even higher.

Want more investment ideas? The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

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

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 »

asx share price competitions represented by businessmen arm wrestling
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 »

person reading news on mobile phone
⏸️ 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 »