The Australian dollar has experienced a huge fall in recent times, dropping to US 87c and many economists have forecast it to fall even lower. If you believe the Australian dollar has further to fall, one of the best ways to profit is by purchasing Australian listed companies with significant offshore earnings.
When looking at quality, global Australian companies that earn the majority of their revenue overseas, it’s hard to go past the healthcare sector. Australia has some global leaders in the healthcare sector, including CSL Limited (ASX:CSL), Cochlear Limited (ASX:COH) and ResMed Inc. (CHESS) (ASX:RMD). These companies benefit from a falling dollar once their overseas earnings are converted back into Australian dollars.
CSL earns the majority of its revenue in North America and Europe (approximately 72%) and is one the largest blood plasma producers globally. The share price of CSL has increased by 700% over the past decade, and the shares still look cheap.
Cochlear earns approximately 40% of revenue in North America and 45% in the EMEA region. Although the shares currently look a little expensive, the company is set to benefit over the longer term from growing demand from emerging markets, and increasing government healthcare spends in the developed world.
ResMed is a leader in the treatment of sleep apnea and the potential addressable market for ResMed is huge. Furthermore, ResMed derives the majority of its revenue in the United States and will benefit from an increasing U.S. dollar.
By investing in these companies, Foolish investors can gain through exposure to the growing U.S. economy and falling Australian dollar without taking on direct exchange rate risk.
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Motley Fool contributor Bradley Murphy owns shares in CSL, Cochlear and ResMed mentioned in this article.