We recently compiled a list of the 10 Best Long Term ASX Stocks to Buy Now.In this article, we are going to take a look at where ioneer Ltd (NASDAQ:IONR) stands against the other long term ASX stocks.
Vanguard believes that Australia's economy remains well-placed to recover gradually in 2025 after the broader economy witnessed its slowest growth in 32 years in 2024 amid sticky inflation and higher interest rates. The investment firm expects modest improvement in economic momentum, courtesy of higher real household incomes as inflation subsides. Furthermore, a rebounding housing market and expectations of rate cuts might also provide some support.
Key Indicators Likely to Shape Australia's Economy in 2025
The Reserve Bank of Australia (RBA) kept the policy rate target unchanged at 4.35% on December 10. However, the bank noted that it continues to see signs of inflation moving sustainably towards the target. That being said, Vanguard expects that RBA will remain patient and that a tight labor market is expected to keep RBA from initiating rate cuts until Q2 2025. Furthermore, stagnant labor productivity has been contributing to higher inflation.
The employment-to-population ratio of 64.5%, and the labor force participation rate of 67.1% both were at record levels in December 2024. With the broader economy remaining close to full capacity, businesses are required to hire, which can keep the labor market tight and unit labor costs at elevated levels, opines Vanguard. Notably, the unemployment rate increased to a seasonally adjusted 4.0% in December, reflecting a rise from 3.9% in November. The investment firm anticipates that the unemployment rate can rise to ~4.6% in 2025 due to tightened financial conditions amidst higher interest rates.
Outlook on Australian Equities
As per Paul Taylor, Portfolio Manager at Fidelity International, the long-term prospects for Australian equities are promising thanks to numerous structural tailwinds. Notably, population growth fueled by immigration and the associated increase in consumption offer a robust foundation for economic expansion. The persistent service sector inflation is expected to be a critical indicator for RBA to monitor. If the service inflation begins to ease, it can hint at the potential for rate cuts, providing relief for younger Australians witnessing higher mortgage costs and higher living costs.
Furthermore, Taylor believes that the relationship between China and the Trump administration is expected to be critical. If China responds through fiscal stimulus measures to aid the domestic economy, Australian materials companies might benefit. This is due to strong linkages between China's economy and the broader Australian materials sector.
Our Methodology
To list the 10 Best Long Term ASX Stocks to Buy Now, we used a screener to shortlist the stocks that are trading on ASX and the US exchanges. Next, we chose the ones which were popular among hedge funds. Finally, the shortlisted stocks were arranged in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. 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).
An open-pit mine in the countryside, its excavators and vehicles actively uncovering minerals from the soil.
ioneer Ltd (NASDAQ:IONR)
Number of Hedge Fund Holders: N/A
ioneer Ltd (NASDAQ:IONR) is a mineral exploration company. Its focus is on the Rhyolite Ridge Lithium-Boron Project located in Nevada, USA. Notably, the group has a business presence in Australia and North America. The company received its federal permit for the project from the Bureau of Land Management. This is the first US lithium project approved by the Biden Administration as part of its efforts to ramp up domestic critical mineral production.
In another positive development, ioneer Ltd (NASDAQ:IONR) announced that it has closed a $996 million loan from the US Department of Energy (DOE) Loan Programs Office (LPO) under the Advanced Technology Vehicles Manufacturing (ATVM) program to aid the development of an on-site processing facility at the Rhyolite Ridge Lithium-Boron Project in Esmeralda County, Nevada. The company further highlighted that this investment supports American manufacturers and helps in rebalancing the global supply of lithium and boron production and processing, which is being dominated by China and Turkey, respectively. After it becomes operational, ioneer Ltd (NASDAQ:IONR) believes that it will quadruple the nation’s current domestic lithium supply and help power an estimated 370,000 EVs per year.
Furthermore, the project is expected to garner dual revenue from lithium and boron produced directly at the mine site and contribute to establishing a sustainable lithium loop in Nevada, assuring the recycling and reusing of critical minerals. The one-year consensus price for ioneer Ltd (NASDAQ:IONR)’s stock is $7.49.
Overall IONR ranks 8th on our list of the long term ASX stocks to buy. While we acknowledge the potential of IONR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than IONR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
