3 ways to win from a weaker Australian dollar

Aristocrat Leisure Limited (ASX:ALL) shares are one of three that could be given a lift from a weaker Australian dollar…

| 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

Next week it looks as though the U.S Federal Reserve is going to raise rates once again.

In fact, according to CME Group, the market is currently pricing in a 91.3% probability of a rate rise at its June 13 meeting. That 25-basis point rise would lift the target rate up to between 1.75% and 2%.

Looking further ahead, the data shows that the market has also priced in a 67% chance of another rate hike in September, lifting the target rate to between 2% and 2.25%.

Back home it is a very different story with many economists not expecting the Reserve Bank of Australia to raise rates until the end of next year.

I think this could put considerable pressure on the Australian dollar and send it down towards the 70 U.S. cents mark.

This could give companies with exposure to international markets a boost from favourable currency movements. Three that I expect to benefit are listed below:

Appen Ltd (ASX: APX)

Almost all Appen's revenue is derived overseas, with the majority of it in U.S. dollars. In FY 2017 a strengthening Australian dollar was a headwind for this machine learning and artificial intelligence dataset provider, reducing revenue by approximately $5.5 million and EBITDA by $1.2 million. This headwind could become a tailwind in FY 2018 if the local currency tumbles lower.

Aristocrat Leisure Limited (ASX: ALL)

In its recent first-half results Aristocrat Leisure generated $764.9 million or 47% of its revenue in the Americas segment. In addition to this, its fast-growing digital business generated 33.7% of total revenue. While this segment is not broken down geographically, the United States is believed to be the main market for its games. As a result, I see Aristocrat Leisure as a big winner from a weaker Australian dollar.

Hansen Technologies Limited (ASX: HSN)

Another potential winner from a weaker Australian dollar could be this billing and data management solutions provider. In the first-half of FY 2018 Hansen delivered a 36.3% increase in revenue to $118.4 million. Approximately 24% of this revenue was generated in its Americas segment. This could make Hansen worth considering as a patient buy and hold investment.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd and Hansen Technologies. 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.

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 »