In this piece, we will take a look at the ten best Australian stocks to buy. If you want to skip our coverage of some of the biggest stocks in Australia and how you might trade them, then you can skip ahead to 5 Best Australian Stocks To Buy.
When we talk about the fundamentals of macroeconomics, land, along with capital and labor, is a fundamental component of economic growth. After all, land is needed for setting up industrial plants, offices, and other facilities that constitute the fabric of any economy. Subsequently, it's unsurprising that several of the world's largest economies, such as the United States, the People's Republic of China, the Republic of India, and the Russian Federation are all among the largest countries geographically.
The exceptions to this, namely Japan and the Federal Republic of Germany, rely on either their population or engineering technology to make up for a smaller geographical footprint. One country that is among the biggest in the world, at least when it comes to its size, is Australia. Occupying an entire island, Australia is one of three Anglo Western nations in the southern hemisphere, and it's among the most developed nations in the world.
Australian companies engage in billions of dollars of business each year, and the nation's gross domestic product per capita in nominal terms (GDP per capita) is $63,487 - the tenth highest globally. Additionally, Australia is relatively peaceful and ranks low in corruption perception indexes, making it unsurprising that hundreds of thousands of immigrants flock to its border annually to try to improve their living standards.
Like most countries, Australia is also facing economic turbulence as we enter 2024. Its proximity to China makes it dependent on the second most populous nation in the world, and Australia's strong natural resources industry also ties its prosperity with the global economy.
These factors also affect when it comes to Australian stocks. Some top Australian stocks such as Commonwealth Bank of Australia (ASX:CBA.AX) and BHP Group Limited (NYSE:BHP) are worth hundreds of billions of dollars. Additionally, since Australia is anything but geographically close to the United States, several Australian stocks that represent important portions of its economy are not available for trading on U.S. stock indexes such as the NYSE and the NASDAQ. However, other Australian stocks such as Woodside Energy Group Ltd (NYSE:WDS) do offer American investors to directly take advantage of their strengths locally through the stock market.
Yet, if one were to simply rely on American stock indexes, then investing in Australian stocks would provide an incomplete picture. This is because if we use a stock screener to narrow out all Australian stocks that trade on U.S. exchanges, then a clear divide is present in the form of market capitalization. For instance, while it's true that the most valuable Australian stock in terms of market capitalization is BHP Group whose American Depository Receipts (ADRs) can be bought on the NYSE, the next couple of stocks are available only on the Australian Stock Exchange (ASX).
Some such Australian stocks are also the most valuable. In fact, some high market capitalization stocks apart from the Commonwealth Bank, such as National Australia Bank Limited (NAB.AX), Fortescue Ltd (FMG.AX), and National Australia Bank Limited (NAB.AX) which have a combined market capitalization of hundreds of billions of dollars do not have their shares trade on U.S. stock exchanges. If you're interested in finding out which locally traded ASX Australian stocks bring in billions in revenue, you can take a look at 15 Largest Australian Companies by Revenue.
However, one major Australian stock that trades directly on the NYSE is a technology firm. The U.S. consumer and enterprise technology industry is the most advanced in the world and often sees the world's best and brightest vie for an opportunity to work for mega cap giants such as Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:META). Yet, it's Australia that also competes with the big guns when it comes to organizational, human resources, and project management software.
This is because among the handful of Australian stocks available for trading on U.S. exchanges is the Sydney based software firm Atlassian Corporation (NASDAQ:TEAM). Domiciled in Delaware, along with Oracle Corporation (NYSE:ORCL), Atlassian was among the first firms in the world to develop project management software. Its main product Jira is widely recognized in the industry, and the firm's financial results for Q2 FY2024 reveal that Jira brought in a cool $1 billion in recurring revenue. The firm's Form-10Q for the quarter ending in September 2023 shows that out of the $977 million in total revenue or net sales, $426 million or 43.6% came from the United States. For this particular Australian stock, unlike others like BHP, the U.S. economy is much more important when it comes to analyzing share price performance and evaluating it as a candidate for investment. Since Atlassian Corporation (NASDAQ:TEAM) is an enterprise focused firms, tighter economic conditions such as high inflation and interest rates end up acting as headwinds but also potentially priming it for future growth.
With these details in mind, let's take a look at the best Australian stocks to buy. Some notable picks are Rio Tinto Group (NYSE:RIO), Atlassian Corporation (NASDAQ:TEAM), and BHP Group Limited (NYSE:BHP).
10 Best Australian Stocks To Buy
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Our Methodology
To make our list of the best Australian stocks, we scanned far and wide and made a list of 21 Australian stocks that either trade directly on U.S. exchanges such as the NYSE and NASDAQ or have their American Depository Receipts available for trading. They were ranked by the number of hedge fund investors in Q3 2023 and the top stocks were chosen.
For these best Australian stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Mesoblast Limited (NASDAQ:MESO) is one of the smallest companies on our list. Headquartered in Melbourne, Victoria, the firm is a biotechnology company which has several products in trials to treat diseases such as retinopathy and inflammatory diseases.
Just one hedge fund out of the 910 that are part of Insider Monkey's database had bought Mesoblast Limited (NASDAQ:MESO)'s shares as of Q3 2023 end. This lone investor was Israel Englander's Millennium Management.
Mesoblast Limited (NASDAQ:MESO) joins Atlassian Corporation (NASDAQ:TEAM), Rio Tinto Group (NYSE:RIO), and BHP Group Limited (NYSE:BHP) in our list of the best Australian stocks to buy.
Immutep Limited (NASDAQ:IMMP) is another biotechnology company. It is headquartered in Sydney and is developing treatments to tackle cancer. During its second quarter of fiscal year 2024, the firm had $103 million in cash and equivalents. It believes that these are sufficient to cover operations for the next couple of years.
As of September 2023 end, two out of the 910 hedge funds polled by Insider Monkey were the firm's shareholders. Immutep Limited (NASDAQ:IMMP)'s largest investor in our database is Israel Englander's Millennium Management due to its $1.4 million stake.
8. Opthea Limited (NASDAQ:OPT)
Number of Hedge Fund Shareholders In Q3 2023: 4
Opthea Limited (NASDAQ:OPT) develops treatments for eye diseases that involve the organ's blood vessels and fluid management. It's one of the most highly rated stocks on our list. Analysts have rated Opthea Limited (NASDAQ:OPT)'s shares Strong Buy on average and the average analyst share price target is $12.83.
During last year's third quarter, two out of the 910 hedge funds profiled by Insider Monkey had bought and owned Opthea Limited (NASDAQ:OPT)'s shares.
Bionomics Limited (NASDAQ:BNOX) is headquartered in Eastwood, and like other biotechnology companies, it also focuses on developing cancer treatments. Additionally, the firm is also focusing its efforts on helping patients with nervous system ailments. The firm had a busy 2023, which saw it progress on several products such as a treatments to help manage Post Traumatic Stress Disorder (PTSD).
Insider Monkey's September quarter of 2023 survey covering 910 hedge funds revealed that four had invested in Bionomics Limited (NASDAQ:BNOX).
Tritium DCFC Limited (NASDAQ:DCFC) is the first non biotechnology Australian stock on our list. The firm is part of the highly critical electric vehicle charging industry that has to grow if EVs are to dominate the future. 2023 hasn't been kind to the Australian stock either, as not only did the shares drop by more than 80%, but Raymond James and B. Riley downgraded them to Market Perform and Neutral from earlier ratings of Outperform and Buy.
By Q3 2023 end, seven out of the 910 hedge funds surveyed by Insider Monkey were Tritium DCFC Limited (NASDAQ:DCFC)'s investors. Given the turbulence during Q4, upcoming hedge fund filings for the quarter will be interesting, to say the least. As of Q3, the biggest Tritium DCFC Limited (NASDAQ:DCFC) hedge fund shareholder was Israel Englander's Millennium Management.
Rio Tinto Group (NYSE:RIO), Tritium DCFC Limited (NASDAQ:DCFC), Atlassian Corporation (NASDAQ:TEAM), and BHP Group Limited (NYSE:BHP) are some top Australian stocks.
