We recently compiled a list of the 10 Best ASX Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where BHP Group Limited (NYSE:BHP) stands against other best ASX stocks to buy according to hedge funds.
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.
READ ALSO: 12 Most Promising Green Stocks According to Hedge Funds and 10 Worst Performing Energy Stocks in 2024.
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.
An aerial view of a mining operation in action, with large trucks and yellow diggers.
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).
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.
Overall BHP ranks 2nd on our list of the best ASX stocks to buy according to hedge funds. While we acknowledge the potential of BHP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BHP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
