10 Best Australian Stocks To Buy According to Hedge Funds

2. Iris Energy (NASDAQ:IREN)  

Number of Hedge Fund Holders: 38  

Market Capitalization as of August 30: $571.61 Million  

Iris Energy (NASDAQ:IREN) is a cryptocurrency mining company that focuses on sustainable and efficient mining operations. The company aims to leverage renewable energy sources to power its mining activities.

For the year ending June 30, 2024, Iris Energy (NASDAQ:IREN) achieved an EBITDA of $108 million up from $53.3 million in the previous year. The price of Bitcoin has increased by 116.89%% over the last 12 months which allowed the company to capitalize on favorable market conditions. The company’s Bitcoin mining revenue has increased from $75 million to $184 million year-on-year. This growth was fueled by a significant expansion in its average operating cash rate, which increased from 5.6 EH/s to 9.4 EH/s, resulting in the mining of 4,191 Bitcoins at an average realized price of $44,000. In addition to Bitcoin mining, Iris Energy (NASDAQ:IREN) has strategically expanded into the AI Cloud Services sector. This new business line generated $3.1 million in revenue during its first year and highlights the potential for future growth as the demand for AI solutions continues to grow.

Iris Energy (NASDAQ:IREN) is using 100% renewable energy in its operations. This not only aligns with global trends towards greener energy but also positions the company as a leader in sustainable practices within the industry. Iris Energy (NASDAQ:IREN) is also diversifying into High-Performance Computing (HPC) by leasing GPUs to AI companies such as Poolside.ai. This vertical integration offers a high-margin business model compared to competitors like Core Scientific, which only leases data center space and power.

Iris Energy’s (NASDAQ:IREN) future cash flows are highly sensitive to Bitcoin prices. Predicting Bitcoin’s exact price in the future is challenging due to market volatility and external factors. However, according to a report by Forbes, Bitcoin could reach anywhere between $100,000 and $150,000 by the end of 2025. Iris Energy’s (NASDAQ:IREN) expansion and HPC diversification present potential upsides and the company is well-positioned to benefit if Bitcoin prices rise.

Iris Energy (NASDAQ:IREN) is trading 13.88 times its earnings, which is a 42.3% discount compared to the sector median of 24.05. The company’s earnings are expected to grow by 100% this year. In the second quarter, Iris Energy’s (NASDAQ:IREN) stock was held by 38 hedge funds with stakes worth $420.41 million. Castle Hook Partners is the largest shareholder in the company with a stake worth $6.86 million as of June 30. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $17.43, which represents a 75% upside potential from its current level.