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.