MENU

Should you buy these resources stars?

The resources sector has come under a little bit of pressure recently due to concerns over a global trade war.

However, I remain optimistic that tensions will not escalate to a level that derails the strong global economic growth that is being exhibited.

If this proves to be the case then demand for commodities should remain strong, supporting favourable prices for many of Australia’s producers. Because of this, I believe the resources sector could still outperform the market again over the next 12 months.

Should you buy these resources shares?

Australian Vanadium Ltd (ASX: AVL)

If 2016 was the year of lithium and 2017 was the year of cobalt, I think it’s fair to say that 2018 looks set to be the year of vanadium. The metal, which is named after the Scandinavian goddess of beauty Vanadis, is mostly used in alloys to strengthen steel. Demand for vanadium in this market is expected to rise thanks to China tightening standards on the strength of rebar with the aim of making buildings more earthquake-proof. But it is its use in vanadium redox flow batteries that has investors most excited. According to the Economist, experts believe these massive batteries are a better option for storing large amounts of wind and solar energy than stacks of lithium-ion batteries. Australian investors are betting on Australian Vanadium being a big winner from this boom and it does appear to be worth a closer look given the meteoric rise of the vanadium price.

BHP Billiton Limited (ASX: BHP)

This morning BHP announced the sale of its onshore assets in the United States for a total of US$10.8 billion. I believe this was a smart move by the company and expect the funds to be returned to shareholders in the form of share buybacks or dividends. This could make it a great option for income investors. But it isn’t just an income story, thanks to its diverse portfolio of world class assets and the positive outlook for global growth, I believe BHP could also grow earnings at a solid rate over the coming years.

Rio Tinto Limited (ASX: RIO)

Rio Tinto is my second favourite resources share right now just behind BHP. Much like BHP, Rio Tinto has been busy offloading non-core assets of its own this year and is likely to return these funds to shareholders. Combined with the positive outlook for its earnings thanks to solid global growth, I think it would be a great option for those looking for exposure to the sector.

Like the Rio Tinto dividend? Then you'll love OUR #1 dividend pick for FY 2019

Financial year 2018 is here and The Motley Fool's dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.