Earlier today we took a look at the financial shares that stockbroker and sell side research business Bell Potter had tipped to shine in FY 2018.
I thought I would take this opportunity to look at which shares the broker likes in the resources sector. Here are three of Bell Potter's top picks:
Fortescue Metals Group Limited (ASX: FMG)
According to the report, Bell Potter has a buy rating and $5.55 price target on the iron ore producer. The broker believes that its strong balance sheet and low costs make it an attractive option for investors. It is, however, worth noting that following a strong share price rally in the last couple of weeks, Fortescue's shares are only a fraction off its target price now. As I'm not overly confident on iron ore prices moving forward, I'll be holding off making an investment at this stage.
Galaxy Resources Limited (ASX: GXY)
Its analysts have slapped a speculative buy rating and $3.35 price target on this leading lithium miner's shares. They appear to be pleased with the high lithium concentrate prices that the company's Mt Cattlin operation has received. Furthermore, they believe the potential for increased production and higher recovery rates is likely to result in strong and growing cash flow generation. I'm a big fan of Galaxy and believe the insatiable demand for lithium makes it a great option for investors with a high tolerance for risk.
Regis Resources Limited (ASX: RRL)
Bell Potter has a buy rating and $3.95 price target on this leading gold miner. According to the report, its analysts are attracted to the debt-free and cash-rich miner due partly to its track record of returning excess cash to shareholders. In FY 2016 Regis returned 13% of its revenue to shareholders and is on track to return a similar proportion in FY 2017. Although I am reasonably bearish on the gold price, with an all-in sustaining cost of A$974 an ounce, the gold price would have to fall significantly to impact the company greatly. This could arguably make it a great option for investors looking for exposure to the gold miners.
