4 stocks to get your portfolio set for a weaker AUD

A year ago Aussie holiday makers were flocking to the USA and making the most of a strong exchange rate with the Australian dollar (AUD) at around parity with the US dollar (USD).

Today the AUD is only buying US 88 cents. That’s not as an appealing proposition for travellers but it is a great situation for investors in Australian companies with significant USD exposure.

It doesn’t appear to be too late yet to benefit from this exchange rate trend with a number of quality stocks leveraged to the weakening AUD. Here are four worth considering:–

Shares in Aristocrat Leisure Limited (ASX: ALL) are at a one-year high, no doubt at least partly in response to the weakening domestic currency. In calendar year 2013 Aristocrat earned over 50% of total revenue, $422 million, in the Americas region.

BHP Billiton Limited (ASX: BHP) is massively exposed to the USD as most commodity prices are set in USD. The cost of production for extracting these commodities will remain relatively fixed for BHP, this creates upside leverage to a weakening currency.

CSL Limited (ASX: CSL) and Sonic Healthcare Limited (ASX: SHL) are two health sector firms with major US-based operations. CSL operates a large blood plasma therapeutics business in the USA, while Sonic has a large pathology business there.

Shareholders in companies with USD denominated earnings can expect to see a boost in reported results (all else constant) from companies that report in AUD, likewise repatriation of USD funds back to Australia should help boost cash levels and potentially dividends.

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

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