Investing in Teck Resources

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After screening Canadian stocks based upon dividend, P/B and P/E ratios I have identified a group of companies that might meet my Investment Policy.  One of those is Teck Resources (TCK-B.TO).  Teck is a global mining company that is diversified by material (copper, met coal, zinc, specialty metals) and geographically (active mines in Canada, the USA, Chile and Peru plus exploration in Asia, Europe and Africa).  Mining companies are cyclical, meaning that their fortunes vary with the business cycle (boom and bust).  After a long period of relative good returns, miners are now encountering leaner times.  Indeed, Teck’s share price has fallen from over $60 in January 2011 to less than $30 today.

Screen Shot 2013-05-31 at 10.09.11 AMI have analyzed the stock using the principles laid out in my Investment Policy, as follows.

  • The price is $27.03, which is less than book value (the P/B Ratio is 0.88) and less than the Graham Number of $39.77.
  • The P/E Ratio is 11.75, which is less than the historical average of 14.07
  • The Dividend Yield is 3.33%, and the coverage is 255%
  • Forecast Growth Rate is 7.2%
  • The Gordon Return (Dividend + Growth) is 10.53%
  • The Margin of Safety at current prices is 10%, which is good.

I would have liked to wait for a pullback to $25.50 to obtain a dividend yield of 3.5%+ but I believe the stock has put in a bottom at around $25 and is moving higher.

  • Buy TCK-B.TO @ $27.03

 

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4 thoughts on “Investing in Teck Resources

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