Top 10 Australian Value Stocks to Buy Right Now

Let’s take a look at 10 Australian Value Stocks that investors should consider!

But first, what are value stocks? They’re companies that are undervalued relative to their earnings potential. The strategy of Value investing is a essentially seeking such companies. These stocks may be under-appreciated by the market, offering substantial opportunities for long-term gains.

Value stocks usually have stable earnings, solid balance sheets, and, importantly, a low price relative to their true value. Investors following this approach often look for companies with low price-to-earnings (P/E) ratios, high dividend yields, and strong fundamentals indicating long-term growth potential.

The ASX (Australian Securities Exchange), Australia’s stock market offers numerous options for value investors. Our list of 10 is by no means all of the options available, but just a handful of them that might be considered.

 

10 Australian Value Stocks!

 

1. BHP Group (ASX: BHP)

BHP is a cornerstone of the Australian economy and a global leader in the mining industry. We believe BHP’s current valuation does not fully reflect its earnings power, especially given growing demand for critical commodities especially copper which is essential to global infrastructure and the energy transition. It is easy to think of it as an iron ore company first and foremost, and the company does rely on iron ore for a high portion of its revenues. But even iron ore will be critical to the transition.

Despite recent commodity price volatility, BHP maintains a strong balance sheet with a debt-to-equity ratio well below industry averages. Its free cash flow supports consistent shareholder returns via dividends and buybacks. The current dividend yield is around 4.85%, offering a steady income stream for investors.

What makes BHP particularly compelling is its proactive approach to sustainability and diversification. The company is investing in green energy projects and decarbonisation initiatives, positioning itself as a long-term beneficiary of the global shift towards cleaner resources.

 

Why Buy BHP Now?

BHP is undergoing a major transition, eyeing off copper as its ‘top commodity’ in the future. BHP already copper assets Olympic Dam and Oak Dam in South Australia, Escondida in Chile and a couple of new projects in Argentina and has an M&A warchest to expand its list of projects. It bought Oz Minerals for nearly $10bn and was willing to pay over $70bn for AngloAmerica, but got knocked back.

 

2. Commonwealth Bank of Australia (ASX: CBA)

CBA stands as Australia’s largest bank by market capitalisation, dominating retail banking, wealth management, and business lending across the country.

After recent sector-wide jitters caused by rising interest rates and economic uncertainty, CBA’s shares have retreated to valuations offering a solid margin of safety for investors. Its forward price-to-earnings (P/E) ratio is currently around 23.56, slightly higher than its historical average, suggesting a premium valuation.

We believe CBA’s strong capital position and prudent lending standards will help it navigate potential credit risks better than most peers. Furthermore, with the Reserve Bank of Australia signalling higher interest rates for the foreseeable future, CBA is well-positioned to benefit from expanding net interest margins, directly improving profitability.

Investors can also expect consistent dividend payments; CBA has a track record of returning significant capital to shareholders, with a current dividend yield of around 3.29%. This yield is lower than other Big 4 banks, but the amount per share is almost always higher than any of its peers (i.e. over $4.50).

 

Why Buy CBA Now?

Despite market volatility, CBA’s market dominance and conservative lending practices ensure continued stability. Its current stock price presents a solid opportunity for those seeking dividends and long-term growth. Moreover, with interest rates expected to remain high, the bank stands to benefit from increased lending activity.

3. Telstra (ASX: TLS)

Telstra has faced challenges amid fierce competition and technological disruptions, but this has created a clear buying opportunity. As Australia’s leading telecommunications provider, Telstra controls critical infrastructure, including the largest mobile network and an extensive fibre-optic broadband system.

Telstra is not just a reliable dividend payer; it is actively transforming itself. Currently, Telstra offers a dividend yield of around 5%, maintaining its appeal among income investors. Its investments in 5G rollout, Internet of Things (IoT) solutions, and digital services indicate a strong growth runway.

Given its lower share price relative to earnings potential, Telstra fits the classic value investor profile: a company temporarily undervalued by market sentiment but fundamentally sound.

Why Buy Telstra Now?

Telstra is well-positioned to benefit from growing demand for 5G and strategic investments in digital services. The company’s consistent dividends and stable earnings make it attractive for income-focused investors.

4. Woodside Energy (ASX: WDS)

Energy stocks like Woodside often polarise investors due to inherent sector volatility. However, Woodside’s current market price significantly undervalues its long-term prospects, especially as global energy demand rebounds post-pandemic amid geopolitical supply uncertainties.

Woodside is Australia’s premier oil and gas producer, with expanding liquefied natural gas (LNG) projects strategically positioned to meet increasing global demand. Importantly, Woodside is diversifying into renewable energy ventures, potentially unlocking growth beyond traditional fossil fuels.

From a value perspective, Woodside’s price-to-book ratio is attractive, and its trailing dividend yield of approximately 7.6% is compelling in today’s yield-scarce environment. The company’s disciplined capital management and sustainability initiatives reduce long-term risk.

Why Buy Woodside Now?

With global energy demand expected to rise, Woodside is positioned to benefit from higher oil prices. Its expansion in LNG and diversification of energy mix offer long-term growth potential.

We are particularly excited about Scarborough LNG and Louisiana LNG which will enter production in the coming years and make the company a major player in the global LNG market.

 

5. ANZ Bank (ASX: ANZ)

ANZ is another of the Big 4 Banks. While ANZ’s shares have lagged behind some banking peers recently, its fundamentals remain strong and we think it has the best upside potential of any of the Big 4 Banks.

ANZ’s focus on improving operational efficiency and a conservative risk approach has translated into resilient earnings, even in challenging economic conditions. The bank’s current P/E ratio is comparable to the industry average, indicating fair valuation.

With interest rates stabilising at higher levels, ANZ stands to improve net interest margins, boosting profitability. Its dividend yield, currently near 5.57%, offers investors a stable income stream.

Why Buy ANZ Now?

Because of 2 projects the bank has that have taken a long time to implement but are about to begin bearing fruit. The first is the integration of Suncorp’s retail arm having closed the M&A deal – something that ANZ fought with regulators for nearly 2 years to do. The second, is the roll out of ANZ Plus that will reduce technology costs and enable the bank to pass savings on to its customers that its peers cannot.

6. Scentre Group (ASX: SCG)

Scentre Group specialises in managing retail shopping centres across Australia and New Zealand. While online shopping challenges physical retail, Scentre’s prime locations and evolving business model offer a path to recovery.

The company is shifting towards experience-driven retail destinations, adding entertainment, dining, and community spaces to attract foot traffic. These initiatives reflect an understanding of changing consumer behaviour and may improve rental yields and occupancy over time.

From a valuation perspective, Scentre trades below net tangible assets (NTA), a classic undervaluation sign. The stock offers a dividend yield of approximately 4.73%, providing income as investors await a turnaround.

Why Buy Scentre Now?

With properties in prime locations, Scentre stands to benefit from retail recovery as consumer spending increases. Its focus on adapting centres to changing consumer preferences could drive long-term growth.

 

7. Macquarie Group (ASX: MQG)

Macquarie Group is a diversified global financial services firm with activities ranging from asset management to advisory services. Unlike traditional banks, Macquarie relies less on interest income and more on returns from investments as well as fees and commissions. It has an >$900bn portfolio. Nonetheless, it does have a growing retail loans and deposit banks which has rapidly grown in the last decade.

The company has a strong earnings growth track record, supported by exposure to infrastructure investments and alternative assets. Macquarie’s capital base is robust, and its conservative risk appetite provides resilience during market downturns.

Despite these strengths, Macquarie’s shares have recently traded at levels offering value relative to growth potential and profitability metrics. It has a dividend yield of approximately 3.1% and is known for strong capital growth.

Why Buy Macquarie Now?

Macquarie’s risk management, global presence, and commitment to long-term value make it attractive. After a couple of years of ‘nuanced’ results, its 1H25 results have indicated it is turning a corner.

 

8. Woolworths (ASX: WOW)

Woolworths is a household name in Australian retail, operating supermarkets, liquor stores, and general merchandise outlets. The reason to buy this one is because it has underperformed Coles for a few years now, but could be about to turn a corner.

Woolworths’ strong market position, brand loyalty, and scale provide significant pricing power.

Given recent softness in Woolworths’ share price, it presents an attractive entry point for investors seeking exposure to the resilient consumer staples sector.

Why Buy Woolworths Now?

Woolworths has announced a $400m cost-cutting drive and at least some of this is anticipated to be put in to delivering lower prices to consumers.

 

9. Fortescue Metals (ASX: FMG)

Fortescue Metals is a major iron ore producer with a reputation for operational efficiency and cost leadership. The company has aggressively cut costs in recent years, enhancing competitiveness even when commodity prices soften.

China’s demand for iron ore, a key steel production raw material, is expected to remain steady, driven by infrastructure projects and urbanisation. Fortescue’s focus on automation and renewable energy integration within operations could further reduce costs and environmental impact.

The stock trades at a discount to peers on key valuation metrics and offers a dividend yield of approximately 5.6%, though this may fluctuate due to green energy investments.

Why Buy Fortescue Now?

With China’s iron ore demand expected to stay strong, Fortescue is well-positioned to capitalise on global growth. Its cost-cutting and commitment to shareholder returns provide a solid foundation for future growth.

10. Rio Tinto (ASX: RIO)

Rio Tinto is a diversified mining giant with significant exposure to iron ore, aluminium, copper, and other commodities. Its size, scale, and operational expertise underpin strong free cash flow generation and robust shareholder returns.

Rio Tinto’s valuation metrics are currently appealing relative to historic ranges, especially given expected global infrastructure spending that supports commodity demand.

The company is committed to sustainability, aiming to reduce its carbon footprint while investing in technology to improve mining efficiency. With a dividend yield of around 5.4%, it remains a reliable choice for income-focused investors.

Why Buy Rio Tinto Now?

With commodity prices expected to remain high, Rio Tinto will benefit from solid demand. Its sustainable mining practices and innovation help maintain competitiveness globally.

 

Conclusion

The Australian stock market offers a wealth of opportunities for value investors, with many well-established companies providing solid dividends and long-term growth potential. Stocks like BHP, CBA, and Telstra remain key picks for stability, while Fortescue and Woodside offer growth opportunities in the mining and energy sectors.

By carefully selecting undervalued stocks with strong fundamentals and growth prospects, investors can position themselves for success in the Australian market. Always conduct your research or consult a financial adviser to make well-informed decisions.

 

What are the Best ASX Stocks to invest in right now?

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FAQs

• What are value stocks?

  Value stocks are shares in companies considered undervalued relative to their intrinsic worth. They often have low price-to-earnings ratios, solid fundamentals, and strong earnings potential.

• Why should I invest in Australian value stocks?

  Australian value stocks offer stable earnings, strong dividends, and long-term growth potential. The Australian market is known for its stability, making it attractive for investors seeking low-risk, high-reward opportunities.

• Are mining stocks a good investment in Australia?

  Mining stocks like BHP, Rio Tinto, and Fortescue are significant to the Australian economy. While volatile, the mining sector offers growth opportunities, particularly in commodities like iron ore and lithium.

• What factors should I consider when investing in value stocks?

  Consider earnings growth potential, dividend yield, price-to-earnings ratio, and market conditions. Also, evaluate the company’s competitive position and industry trends.

• How can I spot a good value stock?

  Look for companies with solid earnings, low valuations relative to intrinsic value, strong balance sheets, and consistent dividend history. Growth potential and competitive advantages are also key.