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 Woodside Energy Group Ltd (NYSE:WDS) 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.
A worker in safety gear with a drill rig in a sprawling oilfield.
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).
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.
Overall WDS ranks 4th on our list of the best ASX stocks to buy according to hedge funds. While we acknowledge the potential of WDS 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 WDS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.