Although the resources sector is known for being quite volatile, I believe it is well worth having a little exposure to it due to the diversification it offers.
After all, the S&P/ASX 200 Resources (Index: ^AXJR) (ASX: XJR) has climbed 13.5% higher year-to-date, vastly more than the S&P/ASX 200.
With that in mind, should you buy these 3 top resources shares?
BHP Billiton Limited (ASX: BHP)
Right now BHP is my first pick in the industry due to the improved outlooks for both oil and iron ore. Almost two-thirds of its EBITDA is generated through its petroleum and iron ore businesses, making the price performance of these two commodities vitally important.
Santos Ltd (ASX: STO)
Whilst I am a big fan of Santos and bullish on oil prices in 2018, I think its shares are fully valued now after a recent rally. In light of this, I would suggest that investors consider waiting for a pull-back in its share price before considering it as an investment.
Western Areas Ltd (ASX: WSA)
Due to the expected increase in demand for nickel to be used in electric vehicle batteries, I think Western Areas could be one to watch in 2018. However, its shares have rallied strongly in the last few months. This could make it worth holding out for a better entry point in the future, in my opinion.
