While the FTSE 100 has fallen almost 2% since the turn of the year, a number of resources companies have soared. That’s at least partly because of rising commodity prices and improving investor sentiment towards the resources sector.

For example, iron ore miner Rio Tinto (LSE: RIO) has recorded an 8% rise year-to-date and in the long run, it appears to offer bright prospects. Certainly, in the short term its share price is likely to be highly volatile since the price of iron ore could realistically move in either direction, but with Rio Tinto having a relatively wide margin of safety, the risk/reward ratio seems to be highly appealing.

In fact, Rio Tinto’s margin of safety is evidenced via its price to earnings growth (PEG) ratio of 0.4. This is helped by a forecast growth in earnings of 46% next year and while forecasts can change, such a low PEG ratio indicates that Rio Tinto could post index-beating share price rises even if its outlook deteriorates. And with the company yielding around 3.7% from a new dividend policy which aims to place the company on an even firmer financial footing, it appears to offer sound income prospects as well as capital growth potential.

Tullow Oil remains an enticing buy

Similarly, Tullow Oil (LSE: TLW) has also beaten the FTSE 100 in 2016. Its shares have risen by 35% year-to-date and part of the reason for this is a rising oil price. While this is good news for the company’s investors, there can be no guarantee that the price of black gold will sustain its recent increase. However, Tullow Oil remains an enticing buy due to its planned ramp-up in production.

With Project TEN set to come onstream later in the year, Tullow Oil’s production is forecast to rapidly rise. In fact, the company is expected to more than double its bottom line in 2017 and there could be further increases beyond next year. With Tullow Oil trading on a PEG ratio of just 0.2, there is significant capital growth potential and with the oil producer set to benefit from improving cash flow over the medium term, there is scope for rising shareholder payouts, too. Therefore, while volatile, Tullow Oil could continue to beat the FTSE 100.

Genel Energy on comeback trail

Although Genel Energy (LSE: GENL) has posted a fall in its share price of 45% since the start of January, it has begun something of a comeback in recent days. In the last week it is up by more than 20%, although the company’s future prospects remain highly uncertain. It posted a loss of $1.2bn in the last financial year, with a writedown in the carrying value of assets of $1bn recorded as a result of a major reduction in reserves estimates, with its Taq Taq field now only having around a third of previous 2P (proven plus probable) estimates.

Looking ahead, Genel also has the added risks of geopolitical instability in the Northern Iraq region, while it is still owed $millions for previous oil production. As a result, and with there being a number of profitable oil companies trading on low valuations, Genel seems to be a stock to watch, rather than buy, at present.

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Peter Stephens owns shares of Rio Tinto. The Motley Fool UK has recommended Rio Tinto and 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.