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4 great blue-chip stocks to benefit from a falling AUD

If you were planning on travelling to the USA for a holiday in 2015, I’m sorry but you should’ve booked six months ago…

Because in just half a year, the Australian dollar has fallen over 13%, to just 81.26 US cents. And in 2015 it’s expected to fall even further.

RBA Governor Glenn Stevens recently said he continues to believe the currency is overvalued and would like to see the AUD closer to 75 US cents.

If it does drop that low in 2015, they’ll be some obvious winners and losers.

The losers

For outbound travellers, holidays to the US will become much more expensive.

Companies with large amounts of US denominated debt will also be worse off. As always, investors should carefully assess how well a company can service its debts if currencies or interest rates fluctuate. This doesn’t require any complicated mathematics or a finance degree, simply find your company’s annual report then go to ‘notes to the financial statements’ and the company will report its sensitivity to both interest rate and currency fluctuations. Companies which incur costs in foreign currencies but revenues in AUD will be adversely affected.

The winners

Clearly the winners of a depreciation in the AUD will be companies who derive a large proportion of their revenues overseas. Packaging giant Amcor Limited (ASX: AMC) receives just 3.9% of revenues from Australia and nearly 30% from the USA. In addition a recovering US economy will spur demand for packaging services.

Investment bank Macquarie Group Ltd (ASX: MQG) derives 65% of revenues offshore and will also receive a welcome boost from a stronger US share market.

Implantable hearing device manufacturer Cochlear Limited (ASX: COH) said in its 2014 annual report, a 10% decrease in the AUD against other foreign currencies (not just the USD) would have increased profit by $5.8 million and equity by $14.1 million. Combined with the rollout of new devices, Cochlear’s share price has unsurprisingly rallied 21% in the past six months.

Lastly 70% of assets controlled by shopping centre giant Westfield Corp Ltd (ASX: WFD) are located in the US. It is, like Amcor, directly exposed to both a stronger currency and US consumer confidence.

Foolish takeaway

With the currency set to continue falling in 2015, now could be a great time to position your share portfolio to benefit. This can be done by investing in companies which derive a significant portion of their earnings offshore (like those above), or investing directly in US shares.

Indirectly, Australia’s retailers will also become more competitive against online international rivals…

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. You can follow Owen on Twitter @ASXinvest.

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