The Australian dollar climbed 2.8% last week to trade at just under US90c. While the dollar could certainly continue to strengthen in the short term, there are still strong indications that it will fall further in the medium-to-long term. For instance, the US economy is showing strong signs of recovery while the Reserve Bank of Australia has also indicated that it would prefer the currency to trade at around US80c. As such, last week’s currency rally actually poses a very good opportunity for Australian investors to consider shifting some of their money into US equity markets in order to recognise…
The Australian dollar climbed 2.8% last week to trade at just under US90c. While the dollar could certainly continue to strengthen in the short term, there are still strong indications that it will fall further in the medium-to-long term.
For instance, the US economy is showing strong signs of recovery while the Reserve Bank of Australia has also indicated that it would prefer the currency to trade at around US80c. As such, last week’s currency rally actually poses a very good opportunity for Australian investors to consider shifting some of their money into US equity markets in order to recognise these gains!
Investing offshore exposes investors to a number of benefits, such as diversification and the possibility of exchange rate gains – that is, not only can investors recognise gains from the appreciation of any US shares held but also from exchange rate gains (effectively creating the possibility of realising two profits).
Furthermore, while Australia’s market represents just 2% of the global market, there is literally a world of opportunities out there to be realised. The United States is home to some of the world’s largest and most recognisable brands. Take Facebook Inc (NASDAQ: FB), Google Inc (NASDAQ: GOOG), Apple Inc. (NASDAQ: AAPL) or McDonald’s Corporation (NYSE: MCD) as just a few examples.
Without further ado, here are three US companies which you could consider adding to your collection today:
Amazon.com, Inc. (NASDAQ: AMZN): There is no other company in the world set to benefit more from the booming online retail sector. The company continues to go from strength to strength, having recently reported a 20% increase in sales to US$25.6 billion. While a 20% increase is clearly a very strong result, the stock actually plunged as Wall Street had been hoping for a sales figure of US$26.1 billion.
Although the stock might not appear cheap (it’s currently trading at US$361.08 per share), there are very strong signs that the company will continue to grow at alarming rates over the next decade or more.
3D Systems Corporation (NYSE: DDD): A growing number of sectors have recognised the potential that 3D printing could bring to their industry. For instance, 3D printers have been used to create items of clothing, parts for fighter jets and there is even the possibility that they could be used to build custom-made parts for the human body.
Like Amazon, 3D’s shares have also plunged in recent weeks after the company released preliminary guidance forecasting lower than expected earnings for fiscal 2014 (the main culprit was its heavy investments in R&D to accelerate production in the future). This has created an incredible opportunity for investors to get on board early in the company’s growth story with shares currently trading at $66.44.
Sierra Wireless, Inc. (USA) (NASDAQ: SWIR): Sierra Wireless is a leader in the machine-to-machine (M2M) communication industry and is continuing to strengthen its position in the market which would benefit long-term shareholders enormously.
The technology could be used for a number of things – take, for instance, letting our appliances decide for themselves how best to save energy, or smart highways that could reroute traffic before congestion begins – the possibilities are endless.
Sierra is still a small company, trading at just $19.03 per share with a market capitalisation of just US$591.8 million, and investors who buy in now could recognise enormous gains in the future.
There are enormous benefits that can be realised from investing offshore, and the recent strengthening of the Australian dollar has created an even more attractive opportunity to do just that.
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Motley Fool contributor Ryan Newman owns shares in Amazon.com, 3D Systems Corporation and Sierra Wireless, Inc. (USA).