I think the Australian Dollar (A$) (AUD) is high and if I’m right and it falls even a little bit, companies like CSL Limited (ASX: CSL) and Cochlear Limited (ASX: COH) stand to benefit.
AUD v. Cochlear and CSL
As can be seen above, the AUD has gone in the opposite direction to Cochlear and CSL shares. Of course, the falling has not caused their share prices to increase – it has only aided in their rise.
Both of these specialist health-related companies generate much of their sales and profit from overseas markets. Earning US Dollars ($) (USD) boosts their sales when they are converted back to Aussie dollars. Therefore, a lower Aussie dollar helps CSL and Cochlear.
Is the AUD headed lower?
As I noted earlier today, the Australian dollar appears to have high expectations built into it, particularly around interest rate increases from the RBA.
That’s why I’m considering adding more money to my US stockbroking account.
However, even if you do not have a USD investing account — which is totally worth it, in my opinion — you could consider buying shares of companies like Cochlear, one of the world’s leading hearing aid developers; or CSL, the world’s leading blood plasma vaccines business.
Neither company appears dirt cheap at current levels. However, they may still be worthy of a small initial investment if you are a long-term investor.
That way, if their share prices continue to fall you can build your stake in these quality companies slowly over time.
You probably don’t know this market leader, but it’s making waves in Asia and already boasts a term-deposit-crushing dividend of almost 5%. A debt free balance sheet and dominant market position at home and abroad mean this company offers investors income and some real-deal growth potential.
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The Motley Fool Australia has no position in any of the stocks mentioned. 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.