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Should you buy these top resources shares?

Credit: iStock

As I mentioned earlier today, I think that BHP Billiton Limited (ASX: BHP) shares are the best option for investors looking to gain exposure to the resources sector.

But they’re not the only shares in the sector that could be worth a look. Here are three more that could be worth considering:

Galaxy Resources Limited (ASX: GXY)

One of the most exciting but high risk areas of the resources sector in my opinion is the lithium industry. The standout pick for me in the industry would have to be Galaxy Resources due to its quality portfolio of assets. Demand for lithium is expected to grow at an incredible rate over the next decade thanks to the electric vehicle market. However, there are concerns that supply will ramp up to such a degree in the medium term that prices will be greatly impacted. While I do agree that this is a distinct possibility, many larger players have recently reported improvements in prices. If lithium prices hold at these levels or even improve, then Galaxy will be positioned to deliver bumper profit growth for a long time to come. But it is a big if.

OZ Minerals Limited (ASX: OZL)

With the global economy predicted to grow strongly over the next couple of years, I expect demand for copper to be robust. This could help support the elevated prices that OZ Minerals is enjoying at the moment or even take them higher. Australia’s leading copper miner could be given an additional boost in the near term if it successfully completes its acquisition of industry peer Avanco Resources Limited (ASX: AVB).

South32 Ltd (ASX: S32)

I think this diversified miner could be worth a closer look after strong price increases in many of the commodities that it produces. Although prices of alumina and aluminium have pulled back from their recent peaks, they are still notably higher than where they were a year ago. It’s a similar story for manganese as well, though admittedly to a lesser extent. Overall, I believe this has positioned South32 to deliver bumper free cash flows in FY 2018.

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. 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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