Teck Resources Ltd. (B) (TECK.B.TO)

Looking at the commodity spectrum, this one comes right to the top of the list, because of the 3 stools, metallurgical coal, zinc and copper. Met coal tanked 2-3 years ago and had a remarkable recovery at over $300 a ton. Collapsed to $150 a ton, and is now trading at around $200 with a bias to probably going lower. That kind of spooked the street. What was forgotten is that this is probably the largest zinc producer, and is trading at multiyear highs. Inventory of zinc globally is about 11 days. Where zinc is a play today, copper should be the play 2-3 years from now. The price is pretty attractive. He would be looking to Buy more than to Sell today.

Look for very strong 3^rd quarter results. The estimate is around $1.20 versus about $0.20 last year, and that is going to be a positive factor. Technicals are a bit mixed, where the stock is trying to form a triangle. If it moves above the triangle, that would be positive. On a momentum basis and relative strength basis, it is kind of neutral. Historically this has done very well from approximately January through until May of each year.

This has had a very volatile history. It has been bounced between $3.50 several times over the last couple of decades. Right now, it is in the middle of that range. Coal price has probably peaked, which is about 50% of their revenue, and there will be negative pressure from that. On the other hand, about 25% of the business comes from zinc, and another 25% comes from copper. Those 2 businesses are looking better. Half the businesses are doing well and half are under pressure. They also have a big investment in an oil sands project, which is high cost oil at the end of the pipeline, and he does not like that part of the business. He wouldn’t buy it here.

In the last day or so, we have seen a few of the mining stocks suffering from fairly rapid setbacks. What was driving this company up to now was a very good met coal market. Right now, he thinks people are stepping back and saying “We have seen some strength in commodities lately, but how sustainable is it, and how likely is it going to last.” The pullbacks might be a bit of a buying opportunity.

This has exposure to met coal, copper and zinc. Met coal prices tend to be quite volatile, and have been recovering. Also, zinc prices have been improving. Of all the commodities, she feels zinc is the most favourable. Hasn’t been adding to her holdings. Would like to wait for it to pull back a bit more, as well as more clarity as to what met coal prices look like for the balance of the year.

The Chinese just sold a big chunk of their holdings. This is kind of a premier resource stock. It is almost like a mutual fund, because it has a little bit of everything. The chart shows it is in a bit of a down trending movement. There is a lot of volatility, but net/net it has been selling off since the last part of 2016.

Up 32% on this. What should I do? Any time you are up a lot in a stock, it never hurts to take a little money off the table. The outlook for the company is solid. They have benefited from commodity prices, particularly met coal and copper, increasing recently. A pretty diversified base metals company. Have had a lot of debt, but are starting to pay that down and deleverage the balance sheet, which is one of the reasons the share price has done well. Over the next couple of years, because the capital expenditure is going down, you are going to see increased free cash flow from this business, which will allow them to pay down more debt, allowing the equity price to continue to appreciate.

In the past, he has very much liked the base metal commodity space. Had thought that with the growth demand in China these were must own names. Had a change of heart in 2010-2011, and completely eliminated his exposure. This lives and dies with the price of metallurgical coal and other commodities.

He says sell! When commodity prices were high and we were bullish about Chinese growth, the stock was $40-$60 when it was firing on all cylinders. He does not think we are going back to that. We already rallied back to the $34 area. He is a better seller than a buyer.

He has trouble buying this one low and selling high. This is generally a trade. It is not going to run up again and so it is probably a better sell than a buy.

He likes what they have done in terms of containing costs. They are a good way to play zinc. All these base metals have had a good run off positive numbers in China. He would hold it and let it pull back here and then buy more. He likes the outlook for zinc.

Had a huge downdraft in 2015 and recovered nicely in 2016 with a huge run, and then finally gave up the ghost. It has 3 commodities, metallurgical coal, zinc and copper. Met coal hit $300, fell back to $150, and is now rallying up to $200. Commodity stocks are hard to investment in unless you buy right. The nice thing about this one is that for the near term you have met coal which has stabilized at much higher prices than anyone anticipated and generates lots of cash. Most important though, over the next 6 months, zinc looks very, very tight. Then when you get out to 2020, 2021 and 2022, copper looks to be in significant shortfall, and this company will play that, especially with their 2^nd project of QB2. Also, the company has fixed the balance sheet. He would like to see a bit of a pullback.

Very strong seasonality. The best time is from October through to early January. Right now, there is a little bit of concern. The chart shows it is coming under some pressure and is currently in a downward trend. It has some seasonality coming into the summer until around the middle of July. It then has a selloff period through until October. This might be an opportunity to get out.

Overall, a great company. Has good leverage to global growth. To a large extent, the glory days are behind, because he doesn’t think we are going to see the infrastructure boom in China or India any time soon. A good, solid company with a decent balance sheet. It is probably fine, although it wouldn’t be his 1^st choice.

He intends to hold it for at least 18 months. He is attracted to the coal and copper exposure. He also likes their heavy oil operations. We are in the early stages of a bull market. They have fine processing facilities. He takes Chinese prognostications with a bit of skepticism. He just watches commodity prices. If copper prices don’t rise we won’t have the ability to transmit electricity.