MENU

Discounted stocks for the falling Aussie dollar

Since May 15, the S&P/ASX 200 (ASX: XJO)(Index: ^AXJO) has dropped from 5,249.60 to open today at 4,802.60 — an 8.5% discount on Australia’s top 200 stocks. Thomas Murphy, of Family Office Research and Management said that, “At today’s levels the Australian share market looks very cheap” and tipped the index to finish the year between 5,300 and 5,400 points.

With interest rates also tipped to fall hard and NAB (ASX: NAB) expecting the dollar to fall further before the end of the year, investors should be focusing on finding stocks that haven’t already inflated in price due to investors’ expectations. Stocks like Treasury Wine Estates (ASX: TWE) and CSL (ASX: CSL) have already risen 37% and 59%, respectively, in the past 12 months and are operating at high earnings ratios.

Amcor (ASX: AMC) is a blue chip that is likely to be cheering on the lower Australian dollar, with over 30% of revenue coming from its US operations. Together with acquisitions and organic expansion in Europe, a comfortable current price to earnings and a 3.8% dividend, investors could do worse.

If you’re after a defensive play but still want exposure to overseas markets, Westfield (ASX: WDC) pays a healthy 4.4% dividend and has a huge market cap for reassurance. After dropping 7% in the past two months and 40.9% of revenue coming from the USA and Brazil, it might be trading at a discount.

This small cap has recently made a breakthrough in US markets with its offering of lottery promotions through a number of major American retail chains. Although profit is likely to remain steady for the next year, Jumbo Interactive (ASX: JIN) maybe just about to take off.

Foolish takeaway

Setting your portfolio to take advantage of currency fluctuations and market expectations is important but the best way to make money is to find good long-term stocks. Large upsides and competent management will help your investments on their way. If the recent run-up and sudden fall of the ASX has taught us anything, it’s that you must find good companies at the right price and except volatility in the short term.

In the market for high yielding ASX shares? 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 Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.