Although many investors will avoid the resources sector due to its volatility, I believe it is well worth considering a little exposure to the sector in order to maintain a diverse portfolio.
After all, the sector vastly outperformed the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) in 2016 and so far in 2017.
With that in mind, are these three popular resources shares worth investing in today?
BHP Billiton Limited (ASX: BHP)
With 65% of its EBITDA coming from its petroleum and iron ore operations in FY 2017, a successful investment in BHP is largely dependent on these two commodities. While I think iron ore prices could still come down a touch, I feel reasonably confident that oil prices will remain in or around current levels in the medium term. This could make BHP one to consider.
Oil Search Limited (ASX: OSH)
As I mentioned above, I'm a little more bullish on oil prices moving forward. I think global demand and OPEC's production cuts will help keep prices at current levels in the medium term, which would be great news for oil and gas producers like Oil Search. While it wouldn't necessarily be my first pick in the industry, I do think there could be meaningful upside for its shares over the next 12 to 24 months.
Pilbara Minerals Ltd (ASX: PLS)
Although I am very bullish on global lithium demand over the next decade thanks to demand from electric vehicle manufacturers and the renewable energy market, I can't help but feel that a lot of this growth has now been factored into the lithium miners' share prices. As a result, I would class Pilbara Minerals and its peers as holds and suggest investors look to get in on any profit taking sell-offs.