2 share ideas to profit from the falling Australian dollar

The Treasury Wine Estates Ltd (ASX:TWE) share price is one of two which I think could get a lift from a weaker Australian dollar. Here's why…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A recent research report from National Australia Bank Ltd. (ASX: NAB) reveals that its analysts expect the Australian dollar to weaken considerably against the U.S. dollar over the coming months if U.S. Federal Reserve continues to raise rates as expected.

I would have to agree with NAB on this one and believe the divergent monetary policies of the two nations makes the Australian dollar look reasonably overvalued at present.

Two shares which I expect could benefit greatly from a significant drop in the local currency are listed below.

Here's why I think they are worth considering today:

Mantra Group Ltd (ASX: MTR)

One of the biggest drivers of the Australian tourism boom has been a weaker currency. I believe an even weaker currency would make Australia a more affordable place to visit, potentially leading to an acceleration in visitor number growth.  As this would be likely to lead to increased demand for accommodation, I believe Mantra group and its leading accommodation brands would be a big winner. Furthermore, as well as encouraging overseas visitors, a weaker currency could make it more expensive for Australians to travel abroad, resulting in an increase in domestic tourism and a further lift in demand for accommodation.

Treasury Wine Estates Ltd (ASX: TWE)

Thanks to the growing demand for its premium products from the Americas and Asia markets, approximately 76% of Treasury Wine's earnings before interest and tax is generated overseas now. Whilst the Chinese market has long been expected to be the key growth driver over the next few years, it is in fact the United States providing the company with the strongest growth. With sales growing at an explosive rate in the country, I think Treasury Wine Estates could be a big winner from a weaker Australian dollar.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »