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Are BHP Billiton Limited and St Barbara Ltd a buy?

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Weaker commodity prices have weighed heavily on miners in the last fortnight, with a fall in iron ore prices not helping the situation – although most gold stocks have rallied as is usually the case during turbulent times.

Fairmont Equities analyst Michael Gable has named these two resource players on his buy recommendations list.

BHP Billiton Limited (ASX: BHP)

Diversified natural resources giant BHP Billiton Limited shares were down close to a percent at the time of writing to $28.55 after a succession of slides since late February.

While the BHP share price has generally tracked up in the last 12-months – rising from $23.55 at this time last year – BHP has been in the news lately for attempting to charm shareholders with a webcast in early March, which revealed BHP investors want to talk dividends and share buy backs and leave the corporate structure stuff to the big wigs in the background.

According to Gable – who also had BHP at a buy last October when it sat around $25.50 and then a sell back in January when it was at around $31.90 – BHP is back in buy territory at the $28 level, with Fairmont Equities slapping a price target of closer to $35 on the share.

Gable said investors wanting to trade the swings in BHP would have been well represented by Fairmont’s previous advice on the stock, with Fairmont having “picked the turning points well” in the past.

Back in the news, UBS analysts last week said the push for BHP to unify its dual-listed structure, was “likely at some point” but most probably “years away” from becoming reality.

BHP has entered into an agreement with Woodside Petroleum Limited (ASX: WPL) this month in relation to the proposed development of the Scarborough gas field, which Woodside will now operate with a 50% interest.

Investors circling BHP should keep Gable’s advice in mind but be sure to do their own research into the state of play for the coal powerhouse – as shares may drop even further if the current market conditions persist.

St Barbara Ltd (ASX: SBM)

Australian gold producer and explorer St Barbara Ltd is on the up today with shares rising 1.4% at the time of writing to $4.13.

St Barbara’s assets include the Leonora Operations in Western Australia and the Simberi mine in Papua New Guinea, with the Gwalia mine the cornerstone asset for the company with a mine life to FY24.

Fairmont Equities analyst Michael Gable has posted a buy recommendation on St Barbara Ltd after the gold producer pushed through its 2016 high to log a continued share price uptrend in the last 12-months, with the share price at just $2.55 at this time last year.

Gable has a price target of around $5 on St Barbara Ltd with a buying rally expected to occur at any moment, meaning investors who wish to follow this advice will need to have their finger on the pulse to capitalise on the potential opportunity.

St Barbara booked an NPAT of $106 million when it handed down its first-half results in late February, with strong cash flow from operating activities and a debt-free balance sheet.

Its growth prospects include a $100 million extension project at Gwalia, with a possible mine life outlook increased to FY31.

One to watch in the resources space.

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Motley Fool contributor Carin Pickworth 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 Scott Phillips.

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