MENU

3 tech stocks that will profit from a lower Australian dollar

The weakness in the Australian dollar has continued this week after hitting a new 2018 low against the greenback of 74.16 cents yesterday. These are levels not seen since June last year as the market has reacted negatively to a weak March retail sales report.

A falling Australian dollar makes the offshore earnings of Australian companies more valuable when converted back into Australian dollars. With that in mind, there are a number of technology stocks on the Australian market that stand to benefit from a lower currency.

Appen Ltd (ASX: APX)

Appen services some of the world’s leading technology companies, automakers and governments by developing high-quality human annotated datasets that are used for machine learning and artificial intelligence. The company posted an impressive full year result in February with revenues increasing 50% to $166.6 million and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rising 62% to $28.1 million.

Appen generated 76% of its revenues in the United States during 2017. A falling Australian dollar could see the company exceed management’s 2018 underlying EBITDA guidance of $50-$55 million which was based on an AUD/USD exchange rate of 80 cents.

Hansen Technologies Limited (ASX: HSN)

Hansen Technologies is a provider of customer care, billing software and data management systems for utilities, pay TV and telecommunications companies. In February, Hansen delivered a strong half yearly result with revenues climbing 36% to $118.4 million and net profit after tax rising 33.4% to $18 million.

The acquisition of Nordic-based Enoro has progressed well with EBITDA margins higher than initially anticipated. During the first half of FY18, the company generated only 19% of its revenues in Australian dollars with the largest contribution in US dollars at 34%. Hansen will also benefit from a lower US federal corporate tax rate of 21% in FY19.

Integrated Research Limited (ASX: IRI)

Integrated Research’s software monitors the performance of an organisation’s IT infrastructure, payments and communications systems. The company’s software is used by a diverse range of customers including over 125 of the US’ Fortune 500 companies and all 10 of the top 10 US banks.

Integrated Research posted another solid result in February for the December half year. Revenues for the period were up 5% to $45.7 million with a sharp 21% reduction in general and administrative expenses being the main catalyst in net profit after tax increasing 20% to $9.3 million. The company derived 68% of its revenues in the Americas region for the first half of FY18.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We're living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That's why at The Motley Fool we've been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We've found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Tim Katavic owns shares of Appen Ltd. The Motley Fool Australia owns shares of Appen Ltd and Hansen Technologies. The Motley Fool Australia has recommended Integrated Research 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.