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

This was the star of 2016, but has softened as met coal prices retreat from $300 to $150 a ton. What is not being factored in is that zinc prices continue to hit close to 5 year highs. Copper prices have fallen in the last little while, but are much higher than they were a year ago. It is generating incredible amounts of cash flow. Debt went down by $1 billion in Q4, and will probably do the same in Q1 of this year. At this price, you get upside optionality. You’ve got a much cleaner, better, safer company in which to invest. He bought more at under $28.

A violently cyclical company. The biggest positive is the zinc market, which is undersupplied. Exposure to coal is their main driver. There has been volatility in coal prices. The underlying economic growth should benefit the commodity cycle as a whole. Their Fort Hills exposure will be able to be funded from cash flow, which is positive. Be prepared for cyclicality. There has been a huge drive in the stock, mostly last year, so a lot of the value is in the name.

This has been benefiting from higher copper prices, and particularly on zinc prices that have been very strong in the last little while. This is also a coal producer. Seasonally, the stock does very well from about mid-October through until April. Unfortunately, the chart is showing it is forming a trading range right now. It is probably near the bottom of that right now. We still have periods of strength coming forward into early this spring, and there will probably be another test of the previous high, which will be the opportunity to take some money off the table.

He is Short this name, as a pair trade against another mining company that is more focused on copper. The majority of this company’s revenue comes from metallurgical coal, and there is a lot of supply that is coming back online. Pricing is not holding up.

He is a big fan of this company. It is just a matter of trying to get it at the right time, because it is going to be cyclical. They own some really great assets and are fairly diversified in copper, oil, etc. Valuation still looks pretty good.

Attractively priced. At the current share price and where coal prices are, the stock is undervalued. If you bring the coal price down to $120, which is breakeven for the industry, this is still trading below its historical valuation. Plus, they have copper and zinc. He thinks the stock is oversold. A risk could be if China cuts back on its use of coal, like its premier had suggested.

An excellent company. They have done a lot to straighten out their balance sheet over the years. Had a great last quarter where they really exceeded street expectations, both from an earnings and revenue perspective. The problem was that the guidance was a little higher than the operating costs. The guide on capital expenditures was a little higher than the street expected. Overall this is a good company.

Had owned this in the past, and what caught him totally by surprise was the tremendous increase in the price of coal, which he felt was a potential drag. Right now, the stock has pretty well taken in the improved prospects and is fully priced.

He really likes this and just recently entered it. An aggregation of a bunch of different commodities giving you exposure to met coal, copper, zinc as well as oil. He also likes the assets they own. Because it has pulled back from $35 a share, down to $26, this is an attractive entry point. There is some volatility, but being spread across 4 different commodities should dampen that a little.

They had a very strong fourth quarter and their guidance for the first quarter of this year because of pre-buying of Iron Ore in the fourth quarter on fears of prices spiking. They had a big run. Iron ore prices are not going to go back to the levels they were before. The zinc outlook is quite favourable. It is now getting back down to levels where she may pick up some more.

They had a fantastic run for a little more than a year. He thinks this will continue. The mining cycle should be three or four years long. They have a lot of zinc revenue.

What a rollercoaster. They almost went bankrupt when coal prices tanked in ’07. If you can live with that kind of volatility then maybe this one is for you. He can’t predict coal and zinc prices. TECK.B-T is a price taker, not a price maker so he does not want to own it.

On a number of occasions, this has gone from $4-$5 to something like $30, and then back down to $4-$5. The time to buy it was when everybody hated it, a year ago. He doesn’t have a huge level of confidence that copper and met coal prices are going to last.

Reporting 4^th quarter earnings on Wednesday. They’ll have great earnings because of met coal prices. They do 27 million metric tons of coal a year. Coal has probably done $100 better than they expected in the past year. It gave them $2.7 billion in increased earnings in the past year. Met coal prices, after running from $100 to almost $300, have come back down to $160, and expects it will go lower. Thinks the stock is going to be looking at down earnings in the next couple of years. If you own, he would sell it now.

He likes this. A good play if you like copper, zinc and metallurgical coal. Last year, this went from $4 to $28, a massive move. Metallurgical coal drove the stock price last year, especially in China. It was trading at around $90 a ton, and then by November it was trading over $300 a ton. Since that time, it has come back down to about $160-$180. This allowed Teck to lock in some longer-term contracts and to help pay off debt. You are not going to see the same kind of performance this year, but he thinks the stock can get back to $40 with another good year of resource markets.