3 resources stocks to smash the ASX: Rio Tinto Limited, Fortescue Metals Group Limited and Woodside Petroleum Limited

These 3 resources plays could outperform the wider market: Rio Tinto Limited (ASX:RIO), Fortescue Metals Group Limited (ASX:FMG) and Woodside Petroleum Limited (ASX:WPL).

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The last month has been tough for Aussie investors. The ASX has fallen by 6% and the trend seems to be downwards – in the short term at least.

However, this provides an opportunity to buy great quality companies at even lower prices. With this in mind, here are three top notch resources companies that trade at super attractive valuations. As a result, all three could make a positive contribution to your portfolio and, over the medium term, could beat the ASX.

Rio Tinto Limited

With a P/E ratio of just 10.1, Rio Tinto Limited (ASX: RIO) is very cheap. Of course, that's not without reason. The price of iron ore has plummeted in recent months and with Rio Tinto heavily reliant upon it for the majority of its profit, the company's bottom line is set to decline by 25.9% in the current year before picking up by 2.5% next year.

However, with Rio Tinto having made a number of cost savings and having turned the business into a leaner, more efficient entity, it seems to be well placed for long-term growth. Furthermore, Rio Tinto's valuation appears to price in further turbulence, which means that it could surprise on the upside over the medium term.

Fortescue Metals Group Limited

It's a similar story for Fortescue Metals Group Limited (ASX: FMG), with earnings at the iron ore producer set to fall at an annualised rate of 25.5% over the next two years. However, further falls appear to be priced in, since Fortescue trades on a P/E ratio of just 6.7 times FY 2016's estimated earnings.

Clearly, this is cheap (especially when the ASX has a P/E ratio of 15.5) and means a substantial re-rating could occur. Allied to this is a fully franked yield of 6.2% that is well covered and shows that Fortescue could prove to be a stunning buy moving forward.

Woodside Petroleum Limited

The odd one out. Woodside Petroleum Limited (ASX: WPL) is forecast to grow earnings over the next couple of years. Indeed, the company's bottom line is set to be an incredible 41.4% higher in FY 2015 than it was in FY 2013.

Despite this, Woodside trades on a P/E ratio of just 13.6, which when combined with its strong earnings growth potential, gives a very attractive PEG ratio of 0.72. With a fat, fully franked yield of 5.7%, Woodside seems to offer growth, value and income potential in abundance and could beat the ASX in future.

Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.

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