Four Canadian stocks to pick when the loonie falls

By generating much of their profits in the U.S., these companies benefit from Canada's weak currency.

Vikram Barhat 23 December, 2015 | 6:00PM
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The Federal Reserve's decision to finally raise U.S. interest rates on Dec. 16 pummelled the already-on-the-ropes Canadian dollar to the lowest it's been in 11 years. Since the start of 2013, when both dollars were at parity, the loonie has been steadily falling and has now lost about 25% of its value against the greenback. The trend is unlikely to change for the foreseeable future.

However, the erosion of the Canadian dollar, especially against its U.S. counterpart, is good for some Canadian companies. These companies have strong U.S. operations that generate large portions of their revenues and profits in U.S. dollars while reporting results in Canadian dollars.

By owning companies whose bottom lines benefit from a lower loonie, investors can play this currency weakness to their advantage. Select high-quality Canadian companies, with strong fundamentals and a healthy revenue and share-price exposure to the U.S. dollar stand to benefit from the tailwind created by a sliding Canadian dollar, according to Morningstar equity research.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Exxon Mobil Corp63.12 USD0.69Rating
Gildan Activewear Inc45.41 CAD0.78Rating
Imperial Oil Ltd43.16 CAD1.55
Manulife Financial Corp25.13 CAD0.28Rating

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

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