One of the best performing areas of the market over the last couple of years has been the resources sector.
During this time the S&P/ASX 200 Resources (Index: ^AXJR) (ASX: XJR) has climbed a remarkable 52% compared to the market's 15% gain.
Can it continue in 2018?
While I do think resources shares can go higher next year, I'd be surprised if the sector continued its outperformance.
At the start of the year I felt there were a great number of resources shares trading at bargain prices. However, today I think value is becoming increasingly harder to find.
But it is there if you look hard enough.
My tips for 2018 include mining giant BHP Billiton Limited (ASX: BHP), energy company Origin Energy Ltd (ASX: ORG), and lithium and iron ore miner Mineral Resources Limited (ASX: MIN).
I believe these three resources shares are amongst the best in the sector at the moment and are well positioned for another strong performance in 2018.
Whereas shares such as Santos Ltd (ASX: STO), South32 Ltd (ASX: S32), and Orocobre Limited (ASX: ORE) could be set to underperform the market.
As things stand I think these shares are starting to look a touch overvalued and could come under pressure if the respective commodities they produce don't appreciate in value over the next 12 months.
