Although the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has fallen almost 10% over the last 12 months, investors who proactively positioned their portfolios to benefit from the falling Australian dollar are likely sitting pretty right now.
This time last year, the local currency was fetching US93.63 cents. It has since fallen more than 26% and hit a fresh six-year low of just US69.13 cents early this morning. Here are just some of the factors driving the dollar lower compared to the US greenback:
- A slowdown in the Chinese economy and a weaker Chinese yuan
- Crashing commodity prices
- Lower growth forecasts for the Australian economy
- Falling interest rates
- Expectations of an interest rate hike in the United States, attracting foreign investment away from Australia
While Australia's big four banks and major miners have acted as a drag on the benchmark ASX 200 index, other companies which generate a large portion of their earnings overseas have actually benefited from the crumbling dollar. While some of them have managed to deliver market-beating performances as a result, others are in fantastic positions to benefit over the coming years with some economists forecasting a fall into the US50s.
Here are three companies that are well worth considering to ensure your portfolio is positioned to profit:
3 ASX companies to profit from the falling AUD
Westfield Corp Ltd (ASX: WFD): Westfield Corp owns and operates Westfield-branded shopping malls in the United States and the United Kingdom, with the opportunity to expand further globally.
With 71% of its global portfolio located in the US, Westfield is in the prime position to benefit from the recovering economy – particularly as it focuses on expanding and redeveloping its 'flagship' malls which generally perform better than the group's 'regional' centres. At $9.58 per share, Westfield presents as a reasonable buying opportunity for long-term investors.
ResMed Inc. (CHESS) (ASX: RMD): ResMed develops and manufactures medical products for the treatment of various respiratory disorders, with a particular focus on sleep apnea. This is a condition that remains undiagnosed in a large portion of sufferers around the world, suggesting a huge target market for the company.
In 2015, ResMed generated just 2.5% of its revenue from the Australian market, with more than half its sales being made in the North and Latin America markets. Germany and France were also significant markets while the 'Rest of the World' segment made up just over one fifth of sales.
As can be seen, ResMed is certainly in a position to benefit from a weaker Australian dollar and with its shares trading for just $7.39 – down from a high of $9.84 in April – it could be a very good pick-up today.
Catapult Group International Ltd (ASX: CAT): Catapult is an unfamiliar name to many investors given its small size and relatively recent listing on the ASX. It's a sports analytics business, providing the software and hardware needed to measure an athlete's performance on and off the field.
Although the company recently suffered a setback, losing its contract with the AFL, investors need to remember that Catapult generated 84% of its revenues internationally in the 2015 financial year, with 38% of all sales coming from the US. While it is by no means a risk-free investment, investors who buy could stand to benefit from considerable growth over the coming years, in addition to the benefits associated with a weaker Australian dollar.
Which should you buy?
Of the companies mentioned above, I think ResMed could be one of the best bets moving forward – especially in this uncertain economic environment. Whatever happens to the global economy, sufferers of sleep apnea will need to continue their treatment so the company's sales are somewhat defensive.
However, investors willing to take on a little extra risk could be somewhat more enticed by what Catapult Group is offering. Although the shares have risen strongly in recent months, the company could have plenty of growth left in it and be very rewarding for shareholders should everything go according to plan.
