2014 has been a very difficult year for investors in resources stocks.
That's because a range of commodities (notably oil) have fallen dramatically in price during the course of the year. This has hurt the bottom lines of resources stocks and caused sentiment in their shares to weaken considerably.
However, this could be a great time to buy such companies, since their valuations are relatively low and their long-term futures could still be bright. With that in mind, here are three resources stocks that could fit the bill to blow the ASX away in 2015.
Woodside Petroleum Limited
With the price of oil having fallen by over 25% this year, it's perhaps surprising that shares in Australia's biggest oil and gas producer, Woodside Petroleum Limited (ASX: WPL), have gained 1% this year (versus a flat performance for the ASX). After all, the company's near-term forecasts and sentiment have undoubtedly been hit by a lower oil price, although much of this has been overlooked by investors who are more focused on LNG than oil right now.
Indeed, with emerging markets seemingly having an insatiable appetite for LNG and having many years of economic development ahead of them, investors remain upbeat about the prospects for Woodside Petroleum due to its exposure to LNG.
This optimism is aided by earnings growth forecasts of 9.8% per annum over the next two years and, with Woodside having a P/E ratio of just 12.1 (versus 15.3 for the ASX), it could prove to be a great value buy for 2015 – especially if the oil price stabilises somewhat over the next year.
Origin Energy Ltd
Despite shares in Origin Energy Ltd (ASX: ORG) having fallen by 3% so far this year, the company still trades on a very high P/E ratio of 20.8. Indeed, that's as a result of its future potential for improved earnings and cash flow from the completion of the Australia-Pacific LNG project in Queensland.
This could be a key catalyst for earnings growth, with Origin set to increase its bottom line at an annualised rate of 34% over the next two years. As a result, it trades on a PEG ratio of just 0.61, which could indicate share price gains are on offer for 2015.
Certainly, there is uncertainty with regard to a potential overspend on its key LNG project in Queensland but, with shares being priced so attractively, there seems to be an adequate margin of safety priced in. As such, Origin could be a resource stock that's worth owning during 2015.
Santos Ltd
Also hit by a lower oil price in 2014 is oil and gas producer, Santos Ltd (ASX: STO). Despite only one-fifth of its business being focused on oil, shares in the company have still endured a miserable year and have fallen by 19% since the turn of the year.
However, as with Origin and Woodside, the future looks bright for Santos as a result of its LNG operations. Indeed, Santos has substantial LNG assets that are set to enter production over the near term and the company is expected to post gains of around 25% per annum in earnings over the next couple of years.
Certainly, the price of oil could fall further and Santos' share price is likely to remain volatile in the short to medium term. However, with shares in the company having a PEG ratio of 0.82, this seems to be priced in. Santos could reverse much of 2014's disappointment in 2015 and deliver top notch share price gains.
Of course, finding stocks that are worth buying at the moment is no easy task. That's especially the case if, like most investors, you struggle to find the time to trawl through the ASX looking for the next big thing.
