Woodside Energy Group Ltd (ASX: WDS) and Fortescue Ltd (ASX: FMG) are two of the largest resource stocks on the S&P/ASX 200 Index (ASX: XJO). Their shares move for very different reasons, their risks differ, and the outlook for one is much stronger than the other.
When it comes to these two powerhouses, I'd buy one but sell the other.
I'd buy Woodside shares
Woodside shares closed 0.11% lower on Wednesday afternoon, at $26.27 a piece. Over the past month, the Australian petroleum exploration and production company's shares are 18.01% higher, and over the year, they're up 7.71%. The company's share price pushed higher on the back of a steep uptick in the crude oil price in late October.
Unfortunately, the latest increase hasn't done much to recover the crude oil price losses over the year. It is still 13.35% lower than 12 months ago and well below the peaks seen in 2022.
Thankfully, Woodside shares have remained relatively stable, and the company has been able to maintain strong dividends throughout the year.
While the dwindling oil prices have dampened Woodside's performance potential, it looks like the company could be set for some tailwinds going forward.
Fairmont Equities' Michael Gable recently said that the share price chart of Woodside indicates the stock has bottomed, amid seeing signs of it starting to move higher again. Although the broker currently has a hold rating on the shares.
Other brokers are more bullish on the stock. TradingView data shows 7 out of 15 analysts have a buy or strong buy rating on the shares. The remaining 8 have a hold rating. The maximum target price is $33.57, which represents a potential 27.8% upside for investors over the next 12 months.
I'd sell Fortescue shares
Fortescue shares closed 2.16% higher on Wednesday afternoon, at $20.36 each. Over the past month, the shares have climbed 0.99% higher, and they're now up 14.7% compared to this time last year.
The iron ore mining giant's shares have been boosted by the recent resilience of the iron ore price. Iron ore has recovered from an annual low in July. Over the past month, it has fallen 1.18%, but it is still 2.27% higher than a year ago, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity.
Fortescue also posted its September quarter results on 23 October. The miner reported record total iron ore shipments over the three months of 49.7 million tonnes, up 4% year on year.
But I'm concerned that, given Fortescue isn't a diversified miner like some of the other mining majors, any further pull-back in iron ore prices over the next 12 months could have a huge impact on Fortescue's financials.
Analysts seem to have the same sentiment, too. Macquarie has assigned an underperform rating to Fortescue shares and a target price of $18.50. That represents a potential 9.1% downside for investors at the time of writing.
