Opinions
David Burrows
Teck Resources Ltd. (B)
TECK.B-T
TOP PICK
Oct 02, 2024
Stock price when the opinion was issued
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Loves that it's focusing on copper and zinc. Very challenging to build those mines anywhere in the world, so it's great long term. But it is a commodity company, subject to swings in copper and zinc, and that's why he usually stays away from commodity companies.
(Analysts’ price target is $80.00)QB2 will be a very valuable asset. Always bumps getting a new mine underway, but outlook for copper long term is very positive. Biggest risk to portfolios is that inflation eats your money, so you need to own things that can put up prices tomorrow if inflation goes up today.
He remains bullish on the copper industry over the next 5 years. Whether to step in here depends on your timeframe. Near term might be soft, as global economy showing signs of softness. Extraordinarily strong balance sheet. Well run given its size. Enviable inventory of zinc and copper mines, plus smelters.
The question was on Iamgold and Teck Resources. IMG has declared some good news from its Quebec mine and Teck has more copper production with gold as an add-on. However both operate in some places that are less politically agreeable. He likes the gold sector but prefers bigger and more diversified companies in more stable countries including the U.S., Canada, Mexico and Chile. Following along this theme he owns both Kinross and Agnico Eagle.
Capital discipline has been very strong. Assets have allowed company to do well through various pricing cycles. Excellent prospects going forward. Would recommend buying for the long term. Copper assets very high quality. Recent acquisition of shares has been good capital allocation.
Is copper the new gold? I don't know about that, but EVs, wind and solar power, and data centres need copper and copper, particularly, is booming. RBC Capital Markets forecasts global copper demand to grow 2.9% this year, with most of that coming outside China, which is expected to increase its copper demand by only 1%. Teck Resources (we're discussing the more-liquid TECK.B on the TSX) is well-positioned to take advantage of this set-up, since TECK primarily mines copper.
Under pressure for a while. Correction today is just going along with the market. If economic slowdown, base metal and commodity prices will suffer. Not a direct 1:1 tariff impact.
This is a moment that Canada has, as a country, to really take advantage of our position in the global dynamic. We need to show the world that we're open for business. It's not about just reacting to the president of the US, it's about what we want to be as a country when we grow up. If we're supposed to be united, why do we have all these inter-provincial trade barriers? Why do we make it so difficult to bring a mine into production? Right now, we're not an attractive venue to raise capital or to put $$ into the ground to make the wealth of resources available to the world.
Demand coming for power, but only so much copper being produced. New mine is operating on track with room to grow capacity. (Chile produces 30% of world's copper, but has little new capacity coming on.) Generates cash and will pay shareholders over time. Copper prices likely to be firm over the next 5 years, and both earnings and the multiple can double. Yield is 0.7%.
(Analysts’ price target is $74.21)A multi-bagger during last commodity cycle. Stocks should start to behave better under the current easing cycle.