Should you buy iron ore miners?

Whilst the resilient price of iron ore might have taken many in the market by surprise, it has been the commodity’s miners that have really left investors shocked.

Most analysts had been predicting that the price of iron ore would be around US$100 per tonne going into the fourth quarter as Chinese mills progressed into the winter period, however, it still remains above the US$130 per tonne mark.

As reported by The Australian, the best performing top 200 Australian stocks since June 30 have been Mount Gibson Iron (ASX: MGX), which is up an astonishing 111%, as well as Arrium (ASX: ARI) and Fortescue Metals Group (ASX: FMG), which have gained 93% and 92%, respectively. In comparison, the commodity has risen just 13% in that time whilst the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has risen 12.9%.

BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) have also recognised pleasing gains, although their size and diversity have diluted the effect on the share price. The pair are up 21% and 25% since June 30.

It is believed that the price of iron ore could remain above US$100 per tonne through to the end of 2015.

Foolish takeaway

There is certainly potential for the miners to continue climbing higher – particularly if the commodity remains as strong as it has been recently. However, there is still a high level of uncertainty and volatility facing the sector which could heavily drag share prices down. Investors might be wise to look elsewhere for stock ideas.

Our top dividend stock

If you are looking for some stock ideas to add to your portfolio today, look no further than our #1 dividend-paying stock. Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.