Is it time to buy these resources shares?

Although the resources sector is notoriously volatile and a difficult place to invest, I believe a little bit of exposure to it through a well-balanced portfolio can be a good thing.

With that in mind, are the three resources shares listed below in the buy zone?

Galaxy Resources Limited (ASX: GXY)

There are few resources shares as volatile as the lithium miners. So an investment in Galaxy would be largely unsuitable for most investors. However, there is no denying that demand for lithium to be used in the batteries of smart phones and electric vehicles is growing strongly. I believe this level of demand and limited new supply will keep prices high and allow Galaxy to profit greatly over the next few years. As a result, I think the recent drop in its share price is a buying opportunity. It appears as though a number of directors which have loaded up on shares in the last few days feel the same.

South32 Ltd (ASX: S32)

I think this diversified metals and mining company is one of the best options in the resources sector for investors. Although there is a slight risk to earnings derived from its South African business due to the new South African mining charter, I don’t expect this to have a notable impact on its overall results. Instead I would suggest investors focus on the benefits of its experienced management team and its other valuable assets.

Syrah Resources Ltd (ASX: SYR)

This graphite miner’s shares have fallen a massive 60% in the last 12 months, much to the delight of short sellers. Short sellers have targeted Syrah as they believe the company is overestimating the likely profits to come from the company’s Balama project once it is operational. This is because they expect Balama to upset the supply-demand balance, leading to graphite prices being greatly below those forecast. Whilst its shares could prove to be an absolute bargain buy, I think the prudent thing to do is to hold off an investment and wait to see the prices Syrah commands when the mine is up and running.

If resources shares are not for you but you love explosive growth potential, then these high-flyers could be just what you are looking for.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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.