The Fortescue Metals Group Limited (ASX: FMG) share price has been amongst the strongest performers on the market on Wednesday.
In early afternoon trade the iron ore producer's shares are up 2.5% to $4.81.
Why are its shares higher today?
With no notable news out of the company this week, today's gain is likely to be attributable to a research note out of UBS this morning.
That note revealed that the investment bank's analysts have upgraded Fortescue's shares from a neutral rating to a buy rating with a $5.30 price target.
According to the note, the upgrade is due to its view that the sector as a whole offers good value to investors at the moment. The broker sees high commodity prices and strong free cash flow generation as a big positive.
The broker is also bullish on industry peers Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP).
Should you invest?
I would agree with UBS on all three of the iron ore producers. Whilst my first preference is BHP due to its exposure to an improving oil price as well, Fortescue is a close second.
Especially with its plan to mine higher grade iron ore in 2018 to combat the ever-increasing discount between the low grade iron ore and the benchmark 62% fines.
Overall, I expect Fortescue has the potential to be a market-beater in 2018 and provide a generous fully franked dividend.
