I’m focusing on the investment prospects of resources stocks BP plc (LON:BP) (BP.L), Sirius Minerals PLC (LON:SXX) (SXX.L) and Centamin PLC (LON:CEY) (CEY.L).
I’m a shareholder in Centamin, and I feel the gold miner has growth potential in the long run. It is on course to increase production, and I think this could have a positive effect on its profitability if the gold price remains firm.
I’m of the view that gold could increase in price in the medium term. I believe higher inflation could be ahead for the global economy, and investors may turn to gold in a bid to maintain their spending power. Therefore, I’m bullish on the prospects for Centamin.
Sirius Minerals is another single-site business I’m bullish about. Its prospects continue to be bright in my view, with the company’s projected margins set to be strong. This could allow it to gradually reduce debt once production starts, which may reduce the overall risk of its project further down the line.
I believe the Sirius Minerals share price could remain volatile in the short term as it remains highly dependent on news flow. But with its project progressing as planned, I think there could be upside as it trades below its project NPV.
BP is one of my favourite resources shares. I like its 6%+ dividend yield and feel it could become highly appealing for investors if inflation moves higher. It is currently twice the CPI inflation rate, and with a strong asset base and profit growth potential it could become more affordable for the business to my mind.
Although the price of oil may remain volatile over the medium term, I think increasing demand from the emerging world may push prices higher. Therefore, while it has a challenging outlook in that respect, I’m nevertheless upbeat about the prospects for the BP share price.