5 shares to profit from a weaker Australian dollar in 2019

Amcor Limited (ASX:AMC) is a business worth considering for smart investors.

| 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

The outlook for the Australian economy in 2019 doesn't look great on the back of falling property prices and low interest rates failing to stimulate already low inflation.

As such many economists and other financial experts are now predicting that the RBA's next rate move could be an interest cut in 2019.

It's not just fast-falling house prices in Melbourne and Sydney that are a problem for the RBA, but the fact that inflation is still consistently running below the RBA's targeted 2%-3% range in a scenario that suggests it may come under more pressure to cut rates in 2019.

Any rate cut currently not priced into currency markets is likely to send the Australian dollar lower in 2019.

Generally, I would not suggest buying shares in a company just because its bottom-line will benefit from a weaker Australian dollar, as value and company quality should be your inviolable priorities as an investor.

However, there are a few quality companies on reasonable valuations and I'd be interested in buying today in the knowledge that a falling Australian dollar could be an additional free kick for them in 2019 and beyond.

CSL Limited (ASX: CSL) is top of the list as this is a stock I'd currently rate as a buy at $184.50 after a steep fall in its share price over the last quarter of 2018. It's currently guiding for FY 2019 underlying net profit growth of 10%-14% but if the dollar falls over the six months to June 30 2019 it could beat the top end of that guidance.

Cochlear Limited (ASX: COH) is another quality healthcare company that earns the marjority of its revenues in US dollars. For me though its valuation is still too high given its moderate underlying growth rates and track record. At $173.10 I value the stock a hold.

ResMed Inc. (ASX: RMD) is a company I've regularly recommended to readers over the last 5 years with the stock tripling in that time and paying dividends along the way. Its founding-family led and takes a long-term approach, but I'd also only value the stock a hold for now.

Amcor Limited (ASX: AMC) is a global packaging business that earns around US$9 billion a year in revenues. It also pays around US$500 million a year in dividends and targets total returns of 10%-15% per year for shareholders. It sells for $13.31 today, although I'd need to look into it further before passing judgement on this business.

Macquarie Group Ltd (ASX: MQG) is the global asset manager and investment bank that has seen its shares fall back around 15% to $106.70 on recent market wobbles. It also directly benefits as the Australian dollar falls and could offer investors reasonable total returns if the global economy avoids a turn for the worse in 2019. As a bonus it should also offers a good dividend yield well above 5% in 2019.

Motley Fool contributor Tom Richardson owns shares of Cochlear Ltd., CSL Ltd., Macquarie Group Limited, and ResMed Inc. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. 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 Share Market News

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Healthcare Shares

How big could the return be with CSL shares in 2024?

Could this biotech company be a market beater in 2024?

Read more »

Smiling man working on his laptop.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave the thumbs up to these ASX shares last week. Why are they bullish?

Read more »

A mature-aged couple high-five each other as they celebrate a financial win and early retirement
Dividend Investing

How to retire early with these ASX titans

There are so many mouth-watering dividend stocks in Australia, those who want to quit work have options.

Read more »

Man sits smiling at a computer showing graphs
Broker Notes

Morgans names more of the best ASX 200 shares to buy in December

These ASX 200 shares have been given the thumbs up by analysts at Morgans in December.

Read more »

A woman looks unsure as she ladles mixture into a pan surrounded by small appliances

My 2024 warning: Don't get (completely) lost in the passive income sauce

It's easy to become fixated on BIG yields to ease the cost of living pressures next year. Here's my word…

Read more »

a diverse groups of about twenty people stand together in a crowd staring to the front with angry and annoyed looks on their faces.
Share Market News

10 popular ASX stocks that faced shareholder revolts this AGM season

Investors vented their fury and frustration over high CEO salaries amid some mostly uninspiring share price performances this year.

Read more »

Smiling office workers fling a stack of papers into the air.
Share Market News

Here's how the ASX 200 market sectors stacked up this week

The ASX 200 gained 0.5% and the real estate sector led the way this week.

Read more »

A woman leaps into the air with loads of energy, in a lush green field.
Share Market News

Here are the top 10 ASX 200 shares today

Do you own any of today's top ASX 200 shares?

Read more »