2014 was a horror year for Australia's listed (and unlisted) resources stocks, extending a string of under-performing years. 2015 may be a better year, but so much depends on the future of the oil and iron ore prices.
Predictions
I'm in no position to give predictions about the way that the iron ore or oil price is headed and, if we're honest, most of the 'experts' will get their guesses wrong too. As such, let's assume that the prices don't move too far from their current positions to find three of the best resource companies based on current and certain future projects.
3 Top Stocks
Woodside Petroleum Limited (ASX: WPL) remains Australia's biggest and brightest oil and gas producer. The company has recently expanded its major Pluto project which will sustain strong free cashflow over the medium term. Woodside is also well placed with a conservative balance sheet, however this may change over the next two to three years if recently purchased projects commence development.
Another oil and gas major that worthy of serious concern is Santos Ltd (ASX: STO). Currently one of Australia's biggest producers, Santos is expected to nearly double production by the end of 2016 as projects in PNG and Gladstone come online. The biggest question over the stock has been that some analysts have questioned Santos' ability to maintain its credit rating following the fall in the oil price, and subsequently the need to raise capital in the near term. This is a near-term risk but over the long-term Santos has the potential to become another Woodside.
Alumina Limited (ASX: AWC) appears to polarise opinion but is an unsurprising alumina producer with some of the lowest cost product in the world. Analysts point to the company's enterprise value being less than half the replacement cost of its alumina capacity as a key reason why it remains a promising long-term buy. Additionally, analysts expect the global oversupply of alumina to subside soon, boosting Alumina's profits.
Looking for Higher Returns?
