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

Metals are starting to see a little bit of life. Chart shows a neckline break at around $26, which is pretty much game over. Now it is kind of bouncing off the current level. If you are a technical person, you can buy this right now, but you have to let it play out. If it breaks the neck line, it could be a great play.

The fair market value is quite high, relative to the current price. If there is any change in the market towards the resource sector, this is a stock that could do quite well. He could see it going to $34.

This has done fairly well over the last couple of years. They are a much different company than they were 10 years ago, when they were largely exposed to coal and coal shipments. He sold his holdings about 6 months ago. The markets they are involved in are extremely unpredictable. Met coal is very interesting, but China is producing at record rates. This would not be his choice within the sector.

This just had a Buy signal, because it broke out of one of his structural levels. His model price is $68, 190% of yesterday’s close. Earnings estimates are $4.17 this year and goes down to $3 next year. He has had Sell signals all along, and this is the 1^st Buy signal he has had. If you are a trader, he would be Long the stock.

A very late cycle type of stock. We saw a very big move in the name so he would be very hesitant to move back into it. The balance sheet risk has been taken out of this story.

The main commodity this company produces is coking coal used in making steel, which had an unexpected huge run, and enabled them to make a lot of money and pay off a lot of debt. As a result, the balance sheet is in good shape. Coal has probably stabilized at the current price. They are also exposed to copper and zinc. It all depends on your view of these commodities. He is quite bullish on zinc and reasonably comfortable with copper. There could be more downside on coking coal.

He just covered his Short of $20 a couple of weeks ago, and this has bounced nicely. If you want to own base metals, focus on copper. In bulk materials, particularly coal, there is a dramatic supply response to the run-up in prices last year. It is not a particularly difficult mineral to mine. Also, this company is very sensitive to a strong Cdn$.

This has met coal, copper, zinc and oil. People are forgetting the zinc story. Zinc is really, really tight and is just starting out to see a run. 3 years out, copper is going to be very tight. Met coal is $140, and their costs are $90. Dividend yield of 1%. (Analysts’ price target is $37.)

Steel stocks have been beaten up and he plays it through an ETF. You have Met. coal in TECK.B-T and so he thinks there is downside potential. He would sell into rallies.

The stock shot up when demand for met coal was strong, but that has now passed and we are really waiting for base commodities such a zinc, copper, etc. There really hasn’t been a major change in the commodity cycle just yet. It will come, but it may not be for a couple of years.

Last year was a great year for a bounce in commodity prices. He believes that we are in a long-term secular bear market for commodities, meaning cyclical advances and declines without making much progress.

He used to own it and sold it. It looks compelling right now. At this price the valuation is quite interesting. You have to feel confident about the various resources they are exposed to. Met Coal he is comfortable with, but the others he is not. They have de-levered the balance sheet, selling non-core assets. It is an attractive name if you want exposure to their commodities, but he recommends against it being a huge position.

His feeling towards commodities in general is that they got overdone in their run up and their downside risk. You are starting to see that both in commodities in general and in this company. A good company, but he has no desire to own it.

We have only a handful of big Canadian companies that are really important. At this level, this is where you want to buy, but first wait for it to break out technically.

A well-regarded company and has pretty much done everything right. However, he is not overly bullish on materials companies right now. You need to see more of the basic infrastructure spending pick up, particularly in Asia, particularly in China. He doesn’t see enough of a push to get a short-term immediate catalyst right now. Doesn’t see any reason to own it today.