Should you buy these 3 top resources shares?

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.

Not keen on resources shares? Then check out these fantastic growth shares before it's too late.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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