3 resources stocks for the top of your watchlist

These stocks hold bright futures but could be subject to investors’ myopia.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The resources industry is always splattered across the front page of Australian newspapers who love to predict the imminent doom which awaits those with exposure to it.

It’s any wonder we’ve got a resources sector at all.

But you see, as the media continues to run stories on job losses, plant malfunctions and huge profit declines, savvy investors are picking up first-class resources stocks on the cheap. For example, investors in companies such as gold producer Silver Lake Resources Limited (ASX: SLR) who bought stock at its low of $0.33 less than a month ago, are today sitting on gains over 50%.

So how can you turn this minefield of an industry into your chief money maker? You can try to time the market with speculative punts, or you can buy established resources companies with proven management and a track record of growing earnings.

For example, one stock which has dropped nearly 4% in the past week is Woodside Petroleum Limited (ASX: WPL). The selloff came after it announced its major shareholder, Shell, would be selling down its stake in the oil and gas producer. In addition, after pulling itself out of the running for a stake in the giant Leviathan gas field off the coast of Israel, shareholders have been left with a number of unanswered questions about the company’s strategy. Further selling pressure could be a good opportunity for long-term focused investors.

Even worse, shares in Rio Tinto Limited (ASX: RIO) have had a disastrous start to 2014 thanks to an iron ore price which was, until recently, seemingly in freefall. With over 90% of Rio’s FY13 earnings derived from the steelmaking ingredient, it’s easy to see why investors have shunned our second biggest mining company. However with a long-term focus, there could be reason to argue that Rio shares have much of the forecast fall in revenues (and therefore profit) already priced in.

After the worst gold price fall in 30 years, investors who took advantage of the substantial discount in gold miner Newcrest Mining Limited (ASX: NCM) have been well rewarded. Falling to a 52-week low of below $7 per share back in December, shares are now up over 50%. With a huge reserves life and low costs, Newcrest will now go about paying down debt and discontinuing unprofitable operations.

3 even BETTER buys

Woodside, Rio and Newcrest are Australia’s best at what they do. Whilst I don’t think all of them are a standout buy at current prices, savvy investors should find a spot for them on their watchlists because there will come a time when they are.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »