The Australian dollar is heading down! That’s what the RBA and economists will have you believe if their forecasts are to be correct over the medium term. The majority of economists are predicting the dollar to fall to between 80 and 85 US cents between now and the end of 2015 as global interest rates rise, making Australian investments less attractive.
Inbound tourists struggling
In a recent trip overseas I gained a good understanding of why Australia’s inbound tourism is waning under the strong dollar. European and Asian counties provide a much cheaper alternative and so a 10% fall in the dollar from the current level around 95 cents to 85 cents or below will make a huge difference to travellers and the country’s bottom line.
The best investors look for counter-cyclical investment opportunities that are currently being offered at a depressed price due to low growth or a poor short-term outlook. Consider these three stocks as ones that could be much higher in 5 to 10 years’ time once the dollar drops and tourism picks up!
3 stocks to profit
Flight Centre Travel Group Ltd (ASX: FLT) is an obvious choice due to its dominant network of Australian stores and global network of travel stores and websites servicing the United States, the UK, New Zealand, Canada, South Africa, China, Hong Kong, India, Singapore and the United Arab Emirates.
Sydney Airport Holdings Ltd (ASX: SYD) is another terrific choice for conservative investors and will benefit from more inbound tourists as it is the busiest Australian airport and a gateway to all corners of the earth. Sydney Airport pays a dividend of nearly 5.5% and is a great, defensive company. This should support the share price during any market corrections.
Finally, a lower Australian dollar should be great for wealthy Asian tourists looking for a top holiday and gambling location. Crown Resorts Ltd (ASX: CWN) owns and operates the dominant casino resort complexes in Melbourne and Perth, and will expand into Sydney by 2017. The group is also heavily focussing on expansion into Asian countries such as Sri Lanka and Japan which should sustain growth for many years to come.
Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned. You can find Andrew on Twitter @andrewmudie
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