Should you buy these 3 resources shares?

With over 700 companies involved in mineral exploration, development, and production, there certainly is a lot for investors to choose from in the resources sector.

To narrow things down a touch I thought I would take a look at three popular resources shares to see if there is an investment opportunity today. They are as follows:

Rio Tinto Limited (ASX: RIO)

Although iron ore took a bit of a tumble overnight, I still remain confident that it will average a higher price in 2018 then it did this year. This could put miners such as Rio Tinto in a great position to outperform. After all, last year approximately 41% of its revenue was generated from its iron ore businesses. Ultimately, I feel Rio could be in a position to deliver bumper profits and strong free cash flow, allowing it to grow its generous dividend further.

Resolute Mining Limited (ASX: RSG)

Although I think Resolute is one of the better value gold miners on the local share market, I’m not overly bullish on the gold price moving forward. I expect that rising rates in the United States will cause bond yields to widen, making yield-less gold less attractive as a risk-free asset to investors. As the gold miners tend to rise and fall with the gold price, this could put Resolute’s shares under a bit of selling pressure in 2018.

Western Areas Ltd (ASX: WSA)

It isn’t just lithium that is in demand from battery makers. Demand for nickel is rising thanks to its use in the batteries of electric vehicles. The nickel price has been rising strongly in recent weeks after reports that supply is lagging demand by almost 66,000 tonnes following a 6.4% year-on-year increase in demand. If this continues into 2018 then I believe Western Areas could outperform the market.

Not keen on resources shares? Then check out these high-flying blue-chips tipped to shine in 2018.

Top 3 ASX Blue Chips To Buy In 2018

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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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