Analysts say these are the ASX resources shares to buy now for big returns

Big returns could be on offer from these shares…

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One thing the Australian share market is not short of is resources shares. But which ones should you consider buying ahead of others?

Here are two ASX resources shares analysts rate highly right now:

Rio Tinto Limited (ASX: RIO)

Goldman Sachs is a bullish on this mining giant. This is due largely to its attractive valuation, production growth, its aluminium business, and strong free cash flow. The latter is expected to underpin a dividend yield in the region of ~13% in FY 2022.

The broker currently has a buy rating and $121.00 price target on its shares. This compares favourably to the latest Rio Tinto share price of $94.20.

In respect to its aluminium business, Goldman commented: “In addition to copper production growth, Rio has one of the highest margin, lowest carbon emission aluminium businesses in the world, with over 2.2Mt of Ali production powered by hydro, and we think ELYSIS inert anode technology could be worth billions of $.”

Woodside Petroleum Limited (ASX: WPL)

Over at Morgans, its analysts are bullish on this energy producer. The main reason for this is the company’s impending merger with the petroleum assets of BHP Group Ltd (ASX: BHP).

The broker thinks Woodside is getting a good deal and expects it to be transformative for the company.

As a result, its analysts have put an add rating and $29.95 price target on its shares. This is notably higher than the current Woodside share price of $21.10.

Morgans commented: “We believe WPL has benefited from being in the right place, at the right time. With: 1) BHP/WPL having an existing relationship, 2) BHP eager to boost its ESG profile, and 3) WPL being a quality operator (safe hands which is important for BHP). From an economic standpoint we think WPL is clearly getting the better of the deal, with synergies not baked into deal metrics and BHP willing to accept a discount. The deal is transformative, lifting WPL into being a top 10 global E&P with +2 billion barrels of 2P reserves, with EBITDA of US$4.7bnpa and growth options.”

Should you invest $1,000 in Resources right now?

Before you consider Resources, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Resources wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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