In more normal times - and nothing is normal at the moment - low oil prices benefit the global economy and stocks such as manufacturers and transport companies. Tim Boreham outlines those Australian companies which stand to benefit from significantly lower energy prices.
Macquarie lifts forecasts for the Australian dollar and, whilst in isolation this is negative for reported earnings, a stronger currency is usually correlated positively with higher global fertiliser prices.
UBS expects depressed prices for ammonia are likely to persist throughout the US cropping season in the second half of FY20. The impact is offset by a lower Australian dollar and improved Australian fertiliser distribution outlook.
Citi analysts had already concluded the risk-reward proposition for owning this stock had turned favourably again, post share market sell-off that followed another profit warning by the company. Since then the analysts attended what they label an "upbeat" Investor Day.
The company has downgraded guidance again for FY19 and pulled forward a strategic review of the fertiliser business. Credit Suisse was not surprised by the drought-driven downgrade but further plant downtime at the Louisiana plant is of concern.