According to a report by the Australian Bureau of Statistics (ABS) published on December 4, 2024, the Australian economy grew by 0.3% in the September quarter of 2024, which marked the twelfth consecutive quarter of growth. This growth, however, was the lowest rate since the December quarter of 2020 after the COVID-19 pandemic. The report also noted that in nominal terms, GDP rose by 0.4%.
In terms of trade, a key indicator of the economy’s international competitiveness fell by 2.5% in the quarter. This decline was primarily due to a 2.6% drop in export prices and was the third consecutive quarterly fall. The weakening in global bulk commodity demand, particularly from China, significantly affected the prices of metallurgical coal and iron ore. Import prices also fell slightly by 0.1%, aligning with lower global oil prices.
However, public investment surged by 6.3% after three-quarters of decline, with government investment rising, driven by increased imports of defense equipment and investments in hospital and road projects. State and local public corporations also contributed to the rise, with increased activity on major road and renewable energy projects.
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According to Morgan Stanley’s 2025 Outlook and Implications for Australian Investors, the outlook for Australian equities is optimistic, though it is expected to lag behind major developed markets, particularly the United States. Morgan Stanley has raised its year-end 2025 price target for the ASX 200 to 8500, reflecting a base case multiple of 17.0x and a forecasted 10% earnings per share growth over the next 12 months. Within the Australian market, Morgan Stanley favors sectors that are poised for strong performance, such as healthcare, technology, and consumer discretionary. These sectors are expected to benefit from secular growth trends and favorable macroeconomic conditions.
In the energy sector, Morgan Stanley anticipates lower crude oil prices in 2025 due to rising supply from both OPEC and non-OPEC producers, outpacing slowing demand growth. This could impact energy-related stocks and investments. Regarding metals, copper remains the top pick, driven by declining inventories and demand recovery at lower price levels. For gold, the outlook is more cautious, with limited upside expected despite potential tailwinds from rate cuts. According to the report, physical demand for gold is beginning to soften, which may dampen its appeal as a safe-haven asset.
The Australian economy continues its growth streak and sectors such as healthcare, technology, and consumer discretionary are positioned for strong performance. With that in context, let’s take a look at the 10 best ASX stocks to buy according to hedge funds.
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Our Methodology
To compile our list of the 10 best ASX stocks to buy according to hedge funds, we used Finviz and Yahoo stock screeners to identify companies that are dual-listed in the United States and Australia. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best ASX Stocks to Buy According to Hedge Funds
10. NOVONIX Limited (NASDAQ:NVX)
Number of Hedge Fund Holdings: 1
NOVONIX Limited (NASDAQ:NVX) is an Australian-based battery materials and technology company specializing in high-performance synthetic graphite anode materials and cathode materials for lithium-ion batteries. The company’s products are integral to electric vehicles and energy storage systems. NOVONIX Limited (NASDAQ:NVX) also offers advanced battery cell testing equipment and research services to assist manufacturers in enhancing battery performance.
NOVONIX Limited (NASDAQ:NVX) is taking significant steps to grow and solidify its position as a leader in the battery materials and technology sector. One of the key initiatives is the expansion of its production capacity. The company is in the process of securing a new site in the Enterprise South Industrial Park in Chattanooga, Tennessee, for its second mass production plant. This facility is expected to reach a full production capacity of 31,500 tonnes per annum (tpa) by the end of 2028. This expansion, combined with the existing 20,000 tpa facility at Riverside in Chattanooga, will bring the company’s total production capacity to over 50,000 tpa by 2028 and will significantly enhance the company’s ability to meet the growing demand for high-performance synthetic graphite.
NOVONIX Limited (NASDAQ:NVX) is also focusing on strengthening its customer relationships and securing long-term supply agreements. The company has signed binding offtake agreements to supply synthetic graphite to major players in the battery industry, including Panasonic Energy, Stellantis, and PowerCo. These agreements ensure a stable demand for the company’s products and provide a solid foundation for the company’s growth plans.
9. Kazia Therapeutics Limited (NASDAQ:KZIA)
Number of Hedge Fund Holdings: 1
Kazia Therapeutics Limited (NASDAQ:KZIA) is an Australian oncology-focused biotechnology company dedicated to developing innovative cancer therapies. The company’s lead program, paxalisib, is an investigational drug designed to treat glioblastoma, an aggressive form of brain cancer.
Kazia Therapeutics Limited’s (NASDAQ:KZIA) leading drug candidate, paxalisib, has demonstrated encouraging results in clinical trials for glioblastoma. The company recently received feedback from the US FDA regarding paxalisib, which will influence its future development plans. While the FDA has stated that data from the GBM-AGILE study will not support accelerated approval for paxalisib, the company is actively assessing alternative strategies. The FDA has indicated that overall survival data from the study could be utilized to support traditional or standard approval, and Kazia Therapeutics Limited (NASDAQ:KZIA) is working to design a pivotal registrational study for the drug. This study will play a key role in shaping the future of paxalisib and the company’s growth prospects.
Beyond its work on paxalisib, Kazia Therapeutics Limited (NASDAQ:KZIA) is pursuing growth opportunities through strategic partnerships and licensing agreements. Recently, the company entered into an agreement with QIMR Berghofer Medical Research Institute, granting it an exclusive license to specific intellectual property rights related to combination therapies involving inhibitor drugs and immunotherapy. This partnership has the potential to expand Kazia Therapeutics Limited’s (NASDAQ:KZIA) pipeline and unlock new opportunities for developing innovative treatments.
8. Immutep Limited (NASDAQ:IMMP)
Number of Hedge Fund Holdings: 2
Immutep Limited (NASDAQ:IMMP) is a biotechnology company headquartered in Australia, specializing in immunotherapy treatments for cancer and autoimmune diseases. Their lead product, eftilagimod alpha (efti), is a soluble LAG-3 protein that aims to enhance the immune system’s ability to fight cancer. Immutep Limited’s (NASDAQ:IMMP) pipeline includes several immunotherapy candidates, developed in collaboration with pharmaceutical partners and targets various cancer types and autoimmune conditions.
Immutep Limited (NASDAQ:IMMP) is concentrating on non-small cell lung cancer, a widespread and aggressive form of cancer. The company has made significant strides with its phase 1 INSIGHT-003 study, which assessed the combination of efti, KEYTRUDA, and chemotherapy in first-line metastatic non-squamous patients. The results have been highly encouraging and have shown benefits across all PD-L1 expression levels, which laid the groundwork for the phase 3 TACTI-004 study, designed to further validate these findings and potentially establish efti as a new standard of care for patients.
Immutep Limited (NASDAQ:IMMP) is also investigating the potential of efti in treating other cancers and autoimmune conditions. The company has already achieved positive results in its phase 2b TACTI-003 study, where efti, in combination with KEYTRUDA, was used to treat first-line recurrent or metastatic head and neck squamous cell carcinoma (HNSCC). Additionally, Immutep Limited (NASDAQ:IMMP) is exploring the application of efti in the neoadjuvant setting for resectable soft tissue sarcoma (STS), where it has demonstrated the ability to achieve three-fold higher levels of hyalinization/fibrosis compared to historical radiotherapy controls.
7. Mesoblast Limited (NASDAQ:MESO)
Number of Hedge Fund Holdings: 3
Mesoblast Limited (NASDAQ:MESO) is an Australian biopharmaceutical company focused on developing allogeneic cellular medicines for inflammatory diseases. The company’s proprietary mesenchymal lineage cell therapy technology targets conditions such as chronic heart failure, chronic low back pain, and acute graft versus host disease. Mesoblast Limited (NASDAQ:MESO) collaborates with healthcare providers and research institutions to conduct clinical trials and bring their therapies to patients in need.
Mesoblast Limited’s (NASDAQ:MESO) flagship product, Remestemcel-L (Ryoncil), recently secured FDA approval for the treatment of steroid-refractory acute graft-versus-host disease (SR-aGVHD) in patients as young as two months old. With this FDA approval, Mesoblast Limited (NASDAQ:MESO) is entering a pivotal phase of commercialization. The company has been actively preparing for the product launch by building a specialized commercial team, engaging with key opinion leaders in the medical field, and forging partnerships with bone marrow transplant centers. These efforts are designed to facilitate a swift and effective market entry.
In addition to its initial approval, Mesoblast Limited (NASDAQ:MESO) is actively exploring further therapeutic applications for Remestemcel-L. A phase 3 study in adult patients with SR-aGVHD is set to commence shortly following the pediatric approval. Moreover, the company is evaluating Remestemcel-L’s potential for treating inflammatory bowel disease (IBD), a widespread condition affecting millions globally.
6. Opthea Limited (NASDAQ:OPT)
Number of Hedge Fund Holdings: 3
Opthea Limited (NASDAQ:OPT) is an Australian biotechnology company developing novel therapies to treat eye diseases, particularly those involving abnormal blood vessel growth and vascular leakage. The company collaborates with ophthalmologists and clinical researchers to advance their drug candidates through clinical development.
Opthea Limited’s (NASDAQ:OPT) lead candidate, sozinibercept, is a biologic designed to inhibit VEGF-C and VEGF-D, complementing the effects of VEGF-A inhibitors. The company is conducting two pivotal Phase 3 trials, COAST and ShORe, to assess the efficacy and safety of sozinibercept in combination with established VEGF-A inhibitors, Eylea and Lucentis. These studies have enrolled nearly 2,000 treatment-naive wet AMD patients across more than 300 global sites, with topline results expected in mid-2025.
Despite the competitive landscape of the wet AMD market, where therapies such as Eylea, Vabysmo, and Lucentis are well established, Opthea Limited (NASDAQ:OPT) is positioning sozinibercept as a complementary treatment to enhance the efficacy of existing options. The company’s strategy is centered on demonstrating that inhibiting VEGF-C and VEGF-D, in addition to VEGF-A, can lead to improved visual outcomes and better patient quality of life.
5. Tamboran Resources Corporation (NYSE:TBN)
Number of Hedge Fund Holdings: 4
Tamboran Resources Corporation (NYSE:TBN) is an Australian energy company focused on the exploration and development of natural gas resources in the Beetaloo Sub-basin in the Northern Territory, Australia. The company aims to become a leading producer and supplier of low-CO2 natural gas to domestic and international markets. Tamboran Resources Corporation (NYSE:TBN) works closely with local communities, regulatory authorities, and industry partners to responsibly develop their gas projects and contribute to energy security.
Tamboran Resources Corporation (NYSE:TBN) is advancing its natural gas resources in the Beetaloo Basin by integrating advanced U.S. drilling and completion technologies. The company is confident that these innovative techniques will help it achieve natural gas production that adheres to Australia’s stringent greenhouse gas (GHG) regulations, which target net zero carbon emissions by 2050. Tamboran Resources Corporation (NYSE:TBN) aims to reach net zero equity Scope 1 and 2 GHG emissions once commercial production begins.
Tamboran Resources Corporation (NYSE:TBN) holds substantial exploration permits (EPs) across approximately 4.7 million contiguous gross acres in the Beetaloo Basin which positions it as the leading acreage holder and operator in the region.
4. Woodside Energy Group Ltd (NYSE:WDS)
Number of Hedge Fund Holdings: 8
Woodside Energy Group Ltd (NYSE:WDS) is Australia’s largest independent oil and gas company, engaged in the exploration, development, production, and marketing of hydrocarbon products. The company’s portfolio includes liquefied natural gas (LNG) projects, offshore gas and oil facilities, and renewable energy initiatives. Woodside Energy Group Ltd (NYSE:WDS) supplies energy to customers globally, including major utilities and industrial users, and is committed to developing sustainable energy solutions.
Woodside Energy Group Ltd’s (NYSE:WDS) growth strategy has reached a major milestone with the Louisiana LNG project, a key liquefied natural gas export facility located on the U.S. Gulf Coast. Following a $1.2 billion acquisition of Tellurian, Woodside Energy Group Ltd (NYSE:WDS) now fully owns the project, which has a potential production capacity of 27.6 million metric tons per year. The company is also waiting for a final investment decision (FID) for the Louisiana LNG project by the end of Q1 2025. If approved, construction will begin shortly after, with production expected to start in 2028.
To advance the project, Woodside Energy Group Ltd (NYSE:WDS) has entered into a revised engineering, procurement, and construction (EPC) contract with Bechtel, a globally recognized engineering firm. The contract is focused on the foundational development of the project’s three production trains, with an estimated forward cost ranging from $900 to $960 per ton of LNG.
3. Amcor plc (NYSE:AMCR)
Number of Hedge Fund Holdings: 18
Amcor plc (NYSE:AMCR) is a global packaging company specializing in the development and production of packaging solutions for various industries, including food, beverage, healthcare, and personal care. The company offers innovative packaging solutions that enhance product safety, extend shelf life, and reduce environmental impact. Amcor plc (NYSE:AMCR) serves a diverse client base, ranging from large multinational corporations to local businesses.
Amcor plc (NYSE:AMCR) is committed to developing packaging solutions that eliminate waste, lower carbon footprints, and increase recycling rates while preserving functionality. To demonstrate this commitment, Amcor plc (NYSE:AMCR) has appointed a new Chief Sustainability Officer and is leveraging its innovative fiber-based offerings, such as AmFiber, a paper-based solution for a variety of products and markets, to drive more growth and support the transition to more sustainable packaging solutions.
Amcor plc (NYSE:AMCR) is also focusing on optimizing its portfolio to orient its mix towards faster-growing, higher-margin categories. The company has been concentrating on categories such as healthcare, meat, pet care, and premium coffee, and is now expanding its focus to include dairy and liquid applications.
2. BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Holdings: 22
BHP Group Limited (NYSE:BHP) is a leading global resources company headquartered in Australia. The company is engaged in the exploration, production, and processing of minerals and energy resources. BHP Group Limited’s (NYSE:BHP) diversified portfolio includes iron ore, copper, coal, nickel, and potash. The company serves industries such as steelmaking, electronics, and agriculture.
BHP Group Limited (NYSE:BHP) is actively pursuing growth opportunities in the copper market, which is expected to see significant demand growth in the coming decades. In South Australia, the company is expanding its Olympic Dam operation, with plans to increase production to over 500,000 tons per year by the early 2030s. BHP Group Limited (NYSE:BHP) is also advancing several copper projects in Chile, including at the Escondida mine, where it plans to invest in new leaching technology to boost production and extend the mine’s lifespan. Additionally, BHP Group Limited (NYSE:BHP) has recently formed a joint venture with Lundin Mining to develop the Filo del Sol and Josemaria copper projects in Argentina and Chile, which have the potential to become major copper producers.
Another key area of growth for BHP Group Limited (NYSE:BHP) is its potash business, where the company is investing in the Jansen project in Canada. The Jansen project is a world-class potash asset and is expected to become one of the largest potash producers globally. BHP Group Limited (NYSE:BHP) is currently constructing the first phase of the project, which is expected to produce around 4.3 million tons of potash per year. The company also has plans for future expansions are planned, with the potential to increase production to over 16 million tons annually.
1. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holdings: 30
Rio Tinto Group (NYSE:RIO) is a global mining and metals company with a focus on finding, mining, and processing mineral resources. The company’s operations span various commodities, including aluminum, copper, diamonds, gold, iron ore, and more recently, lithium.
Rio Tinto Group’s (NYSE:RIO) recent acquisition of Arcadium Lithium marks a significant step in the company’s strategy to become a leading player in the lithium market. Arcadium is a global, vertically integrated lithium chemical producer with a diverse portfolio of Tier-1 assets, including large, low-cost lithium brine operations in Argentina and hard rock mines in Quebec, Canada. By incorporating Arcadium into its portfolio, Rio Tinto Group (NYSE:RIO) aims to position itself to meet the rising global demand for lithium, a key component in electric vehicles and energy storage systems.
Additionally, Arcadium’s expertise in Direct Lithium Extraction (DLE) technology, particularly through its ILiAD initiative, aligns with Rio Tinto Group’s (NYSE:RIO) ongoing efforts in technology development. DLE technology provides a more sustainable and efficient method of lithium extraction, requiring less energy, water, and land while achieving higher recovery rates. This technology is essential for meeting the environmental and sustainability standards that are becoming increasingly important to both consumers and regulatory authorities.
While we acknowledge the potential of Rio Tinto Group (NYSE:RIO) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RIO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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