In the space of three months the value of the Australian Dollar versus the US Dollar has plunged nearly 10% from 94 cents to 85 cents. The US dollar strength has come as a result of a widespread improvement in the US economy that has led to lower unemployment, higher earnings growth from domestic companies and revised forecasts for US economic growth.
Australians can take advantage of this trend by seeking direct investment in US companies via their broker, however this is often a costly or difficult process using Australian brokers.
US-Exposed ASX Companies
A smarter option, perhaps, is to search for ASX-listed companies that generate a significant amount of earnings from the US. Revenue and profit generated in US dollars is worth more in Australian dollars as the exchange rate continues to fall.
Experts predict that the exchange rate could fall further, so it appears that it's not too late to dive in!
Five US-exposed ASX stocks
Breville Group Ltd (ASX: BRG) is well known for producing a range of high-quality kitchen products in Australia and the US. Breville's US sales generate more than 35% of group revenue and the company's strategy has been successful in generating online sales, with nearly 30% generated online. The shares look a little expensive but a wealthier American consumer will benefit Breville over the medium term.
Another big name is ResMed Inc. (CHESS) (ASX: RMD) which is based in the US but has ASX-listed shares too. The company reports earnings and dividends in US dollars, meaning Australians will benefit from higher Australian-dollar income.
The same can be said of packaging specialists Amcor Limited (ASX: AMC). The group generates the majority of revenue from the US and Europe and stands to benefit from a stronger US economy and lower exchange rate.
Another medical goods provider, Cochlear Limited (ASX: COH) has had a tough time of late but appears to have recovered from a disastrous product recall in 2011. The company has returned to growth and it's expected that an improving US economy will boost sales of Cochlear's premium products.
Finally, Brambles Limited (ASX: BXB) is the global leader in supply chain logistics and works with many of the largest companies in the world. An improving US economy will generate more imports and exports, boosting demand for Brambles' services. It's also an incredibly resilient company and has the scale to withstand competition.
Companies like Brambles should be in the portfolio of every investor. Linked to global economic growth, the company provides an in-demand product, is well established, and has spent billions refining the art of efficient supply chain management. This makes it difficult for competitors to get even a small share of the market.
