Although most financial advisors will steer the bulk of your investment decisions to the U.S. equities sector, going abroad offers some potentially profitable opportunities. For one thing, international markets may heighten your risk-reward profile, leading to greater gains potential in exchange for the risk. With that in mind, here are some of the best Australian stocks to buy now.
Of course, the primary basis for the best Australian stocks to buy now is the underlying nation’s vast natural resources. With Russia’s invasion of Ukraine completely disrupting the modern global order, a significant portion of global energy supplies have been effectively axed for Western powers. Therefore, a pro-west government like Australia is a net positive from a geopolitical angle.
However, it’s also important to realize that the best Australian stocks to buy now don’t exclusively focus on the resource sector. That’s how the Land Down Under got on the map, no doubt about it. Still, you’re going to find some intriguing opportunities beyond just the commodities segment. Indeed, it’s an interesting arena for those who want to broaden their horizons.
|NABZY||National Australia Bank||$10.24|
BHP Group (BHP)
A massive metals, mining and petroleum firm, analysts often target BHP Group (NYSE:BHP) as one of the best Australian stocks to buy. However, with the current crisis in Eastern Europe, BHP has cynically and fortuitously received a major bump up in terms of relevance. It’s been a choppy ride, with shares down by 6% on a year-to-date basis. However, the supporting narrative is compelling.
As I mentioned earlier, Russia’s belligerence has changed the game for geopolitical relations. The U.S. and Western allies immediately imposed sanctions on Russia under the concept that they cannot allow violations of sovereignty to go unpunished; otherwise, the global order could rapidly devolve into a free for all, where nuclear-armed countries could go on a territorial shopping spree.
However, the sanctions also mean that Western allies no longer have full access to Russian resources. In 2020, Russian fuel and energy exports reached nearly $167 billion. Subsequently, friendly nations like Australia have become vital to the new world order, benefitting resource powerhouses like BHP.
Rio Tinto (RIO)
The world’s second-largest metals and mining firm (behind only BHP), Rio Tinto (NYSE:RIO) operates under the same thesis as its main rival. With the global community suddenly thrust into a paradigm of empire building, countries must rethink their partnerships and energy dependencies.
The advantage for prospective investors is the speculative discount that Rio provides. WRIO has shed 14% of market value so far this year. Therefore, should the fundamental narrative of energy resources pick back up, RIO could enjoy a high return.
Further, with Rio Tinto covering critical metals such as lithium and copper — elements that are vital to the production of electric vehicles and other industries of tomorrow — RIO represents a solid bet for those seeking international diversification.
Woodside Energy (WDS)
To no one’s surprise given the context of the war in Europe, demand for hydrocarbon products soared. Again, with so much global supplies effectively shelved, costs have escalated tremendously. To be fair, though, the military conflict is only part of the picture. The soaring inflation caused a massive erosion of the dollar’s purchasing power, as evidenced by pain at the pump.
Unfortunately, not many mitigating options exist other than to apply the thesis, if you can’t beat them, join them. For that, we have one of the best Australian stocks to buy for speculators with Woodside Energy (NYSE:WDS). Specializing in petroleum exploration and production, Woodside is what you would call in the industry an upstream player.
To be clear, upstream companies are riskier since the price of energy tends to be volatile. However, they can also yield tremendous gains, especially during sector bull cycles. With WDS gaining momentum — it’s already up 41% YTD — you may want to consider buying shares into potentially rising strength.
While the best Australian stocks to buy now are often tied to the metals and mining segments, the only country that is its own continent is also significant for the agricultural industry. Case in point is Wesfarmers (OTCMKTS:WFAFY). Featuring businesses in retail, chemical, fertilizer, industrial and safety products, Wesfarmers is particularly attractive for its fertilizer segment.
As National Geographic pointed out recently, a global food crisis looms, in part because of a fertilizer shortage. The harsh reality is that myriad headwinds are impacting economic stability. With fertilizer prices skyrocketing, many farmers across the globe are underutilizing their land for food production.
Admittedly, this dynamic creates an awkward situation for Wesfarmers. Clearly, the want for fertilizers exists. However, economic demand is a different story, because it ties into financial capabilities. And that explains in part why WFAFY is down 26% YTD.
Still, for the speculator, Wesfarmers could still be one of the best Australian stocks to buy, because push comes to shove, fertilizer is a commodity of national security implications. Therefore, I wouldn’t be too quick to give up on it.
National Australia Bank (NABZY)
As the National Australia Bank (OTCMKTS:NABZY) proves, not every name among the best Australian stocks to buy are directly tied to metals or mining — or even natural resources. Similar to circumstances in the U.S., the Australian central bank has a hawkish monetary policy, though not to the same degree as the Federal Reserve. Nevertheless, we’re talking about higher interest rates, which all other things being equal tend to benefit financial institutions.
One of the ways banks make money is through the interest they charge through their lending products. With the benchmark rate moving higher, financial firms can essentially charge more, accruing a higher profitability rate. The advantage for the best Australian stocks to buy connected to the financial arena is that the rate hikes for Aussies are much more conservative than we Americans are suffering from.
Therefore, National Australia Bank could have its monetary cake and eat it too.
Goodman Group (GMGSF)
Another intriguing name among the best Australian stocks to buy that’s not directly linked to the resource sector is Goodman Group (OTCMKTS:GMGSF). An integrated commercial and industrial property group, Goodman owns, develops and manages real estate. These property categories include warehouses, large scale logistics facilities, business and office parks.
An intriguing factor potentially bolstering GMGSF is its global profile, with a footprint that expands out to 14 countries. In addition, Goodman commands real estate connected to the solar energy industry in Europe, Hong Kong and Japan, along with Goodman’s home market of Australia. Thus, over time, GMGSF could put smiles in stakeholders’ faces.
I mention the time aspect because Goodman Group is risky. Since the start of the year, shares are down 36% YTD, reflecting global recession fears. Nevertheless, for patient investors, GMGSF could be an enticingly robust discount.
Qantas Airways (QABSY)
Before I get eviscerated for mentioning this, I fully recognize that Qantas Airways (OTCMKTS:QABSY) is an extremely risky venture. With inflation taking a bite out of the real earnings of households, the negativity has extended to travel. However, QABSY just might make a case for one of the best Australian stocks to buy for gamblers.
While revenge travel is losing its luster as the people’s financial condition worsens, we’ve had two years where people were denied vacations, perhaps vacations to far-off lands (like Australia) that they’ve been planning and saving up for. With another crisis looming — this time, an economic one — folks might believe that if they don’t hop on that plane, they might lose their nerve entirely.
Of course, it’s a tremendously risky thesis as I stated above. But you just never know what two years of lockdowns and mitigation mandates can do to the psyche.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.