At the beginning of 2014, many analysts and seasoned investors were saying the resources sector could provide the best buying opportunities of the next decade. So were they right?
I believe the answer is an unequivocal, yes! 2014 has proven to be a great year in the resources sector. However, you probably wouldn’t know it. What with all the negative press surrounding iron ore and the fall of gold prices during 2013.
Despite the huge wave of investor sentiment, savvy investors have made a killing through their ability to buy when everyone else is selling or, in some cases, by buying before everyone else sees the opportunity.
Here are just some of the top-performing resources stocks in 2014.
|Company||Gain in 2014 so far|
|Western Areas Ltd (ASX: WSA)||110%|
|Independence Group NL (ASX: IGO)||56%|
|Liquefied Natural Gas Limited (ASX: LNG)||649%|
|Syrah Resources Ltd (ASX: SYR)||71%|
|Sirius Resources N.L. (ASX: SIR)||55%|
|Northern Star Resources Ltd (ASX: NST)||113%|
|Newcrest Mining Limited (ASX: NCM)||42%|
It’s fair to say, with these gains, investors won’t be shrugging off the industry for much longer and those who continue to ignore it miss the opportunity to notch-up similar gains.
Understandably your risk tolerance will dictate which resources stocks you do and don’t invest in. Obviously, if you’re risk adverse you wouldn’t have bought a company such as Liquefied Natural Gas Limited, but if you’re willing to try your hand at blue-chip resources companies (presumably less risky), there are opportunities for you as well.
For example, BHP Billiton Limited (ASX: BHP) should be on all Australian investors’ watchlist. At $38 per share, I believe it could deliver modest long-term capital gains and a stable dividend income.
In addition, as bearish (negative) as I’ve been on Rio Tinto Limited (ASX: RIO) over the past year, I believe its half-year report (due to be released next month) could compel me to find a spot for it in my long-term portfolio. I’m hanging out until then because there are a few uncertainties I’d like to move past before committing my hard earned investment dollars. However, it deserves a spot on your watchlist right now.
Lastly, I believe there is significant long-term potential left for Independence Group. Zinc and nickel prices remain robust whilst I remain bullish on gold prices in the medium term as inflation rises.
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Motley Fool Contributor Owen Raszkiewicz owns shares in Liquefied Natural Gas Limited and Independence Group.
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