Should you buy these resources shares?

Considering the strength of the global economy and its positive future growth forecasts, I believe resources shares could be in a position to outperform again in 2018.

This could make it worth considering adding a little diversification to your portfolio in the form of one or two resources shares.

In light of this, are these resources shares the ones to buy?

BHP Billiton Limited (ASX: BHP)

I believe that the aforementioned tailwinds and increasing commodity prices could lead to BHP Billiton outperforming the market for the next two to three years. I think that this could make the miner a great addition to a balanced portfolio, especially with its generous fully franked dividend. At present BHP Billiton’s shares provide a trailing 3.6% yield, but I believe this will grow significantly in FY 2018. Especially if it is able to offload its U.S. shale assets in the near future. I suspect the funds raised could be used for a buyback or even a special dividend. As a result, I would pick it ahead of rival Rio Tinto Limited (ASX: RIO) at this point.

Santos Ltd (ASX: STO)

Rising oil prices and takeover rumours have been big drivers in this energy company’s strong share price gain over the last 12 months. During this time Santos’ shares have risen a remarkable 32%, vastly outperforming the market average. However, unless oil prices were to rise notably higher from here, I think that Santos ought to be classed as fully valued now. Especially considering that production is only expected to be in the range of 55-60 mmboe in FY 2018, compared to 59.5 mmboe in FY 2017. However, if the Santos share price were to retreat to in or around the $4.50 level, I would be a buyer again. Until then I would gain exposure to rising oil prices through an investment in BHP Billiton.

But if resources shares are too risky for your liking, then check out these quality blue chip shares.

Top 3 ASX Blue Chips To Buy In 2018

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 2018."

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.

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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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