Is Now The Perfect Time To Buy Amur Minerals Corporation, Tullow Oil plc And Premier Oil PLC?

Should you add these 3 resources stocks to your portfolio? Amur Minerals Corporation (LON: AMC), Tullow Oil plc (LON: TLW) and Premier Oil PLC (LON: PMO)?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Holding shares in resources companies over the last year has been a very challenging experience. That’s because the prices of a wide range of commodities; from oil to iron ore, have fallen significantly in price and led to profit declines, impairments and a fall in investor sentiment. And, looking ahead, there seems to be little hope among industry experts that the situation will dramatically change, which means that the present cloud over the resources space may continue to be present over the short to medium term.

Exceptional Performance

However, not all resources stocks have endured such a disappointing twelve months. For example, base metal exploration company, Amur Minerals (LSE: AMC), has seen its share price soar by an incredible 625% in the last year. In fact, in the last week it has risen by 120%, with the key reason for this being the award of a long-awaited production licence. It concerns the Kun Manie nickel-copper sulphide deposit in eastern Russia, with Amur set to recover a wide range of minerals from the site (including around 840,000 nickel tonnes equivalent) over what the company believes could be a fifteen year timeframe.

Clearly, the news is a game changer for Amur Minerals. And, while there are undoubtedly major risks such as the potential for a further decline in relations between Russia and the West, as well as the financial challenges that come with being a relatively small company, its long term future appears to be bright. Further, while Amur has a price to book (P/B) ratio of 4, improving sentiment is likely to push its share price higher over the short to medium term.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Exceptional Value

Of course, for the likes of Tullow Oil (LSE: TLW) and Premier Oil (LSE: PMO), the last year has been hugely disappointing. Their share prices have fallen by 52% and 53% respectively, which has left investors in the companies with huge losses, but presents an opportunity for new investors to buy in at a very appealing price.

For example, Tullow Oil is expected to increase its bottom line by 49% next year and, when combined with its price to earnings (P/E) ratio of 36, equates to a price to earnings growth (PEG) ratio of just 0.7. This indicates that its shares could move significantly higher and appear to offer a very favourable risk/reward profile.

Similarly, Premier Oil is forecast to bounce back from last year’s losses to post a pretax profit of £56m this year. And, with it having a price to book (P/B) ratio of just 0.67, there appears to be significant upside potential – even if further asset writedowns take place in the next couple of years.

Looking Ahead

While the future outlook for the resources sector is somewhat downbeat, there is great potential and superb value on offer for longer term investors. And, while the likes of Amur, Tullow and Premier Oil are relatively risky, they could also deliver excellent rewards to investors who can live with above average volatility and greater uncertainty than that offered by the wider index. As such, now appears to be a good time to buy all three stocks.

Pound coins for sale — 31 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Tullow Oil. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Here’s what Stocks and Shares ISA investors are buying in 2025 to build a second income

Which shares are investors buying right now in the hope of eventually retiring on a healthy second income? Quite a…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Oh dear! Warren Buffett says people should only invest in companies they understand

Warren Buffett, the American billionaire, says research is the key to being a successful investor. But our writer thinks it’s…

Read more »

Investing Articles

How much would an investor need in an ISA to earn a £700 monthly passive income?

Ben McPoland digs into some numbers to show how a Stocks and Shares ISA portfolio could eventually throw off a…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Now that’s a surprise! The Lloyds share price went up despite disappointing results

The Lloyds Banking Group share price reacted positively to its 2024 results. Initially, our writer struggled to understand why.

Read more »

Investing Articles

Could this FTSE 250 trust outperform Rolls-Royce over the next 5 years? I think so — and then some!

Our writer believes this US-focused FTSE 250 investment trust could have the potential to beat Rolls-Royce's price performance by 2030…

Read more »

A graph made of neon tubes in a room
Investing Articles

Here’s why the Standard Chartered share price jumped 5% on FY results

Investors have pushed the Standard Chartered share price higher in the past 12 months. Judging by these results, it seems…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

3 little-known UK shares for investors to consider buying

UK shares outside the FTSE 100 and the FTSE 250 don’t get much attention. But there are some quality businesses…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Glencore’s share price is 40% off its highs. Time to consider buying?

Back in 2021, Glencore’s share price was near 575p. Today however, it’s near 330p – around 40% lower. Is this…

Read more »