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

It has had a really big run-up. Metals have started showing their head above water. TCK.B-T is one of those companies where the prices were really under pressure and they had a really big debt load. It comes down now to how things play out with their commodities.

The move in met coal, which seemed like the most unloved commodity, just seem to be right out of whack with reality. There has been such a squeeze in the met coal market, and it is going to pull back. Met coal will be back to $125-$150 a ton, at best. It may take a year to do it. Luckily for this company, they can use this windfall by taking all of that cash and solving their biggest problem of outstanding debt.

Up and to the right. It was a bad story and now it is a good story. He loves this chart. But short term it is overbought and it would make it an entry point if it pulled back.

It is Canada’s goto mining company. They have coal AND copper exposure. They are going to have a phenomenal year next year. On the copper side they have done all the right things. You can bring on coal production quite quickly. The stock is under owned in Canada. It is a leveraged play and they have an opportunity to deleverage using their cash flow.

He has not been very good with this stock. There is a good reason why the stock is up now, but it is far ahead of what the fundamentals of the underlying commodities say.

Currently in a period of seasonal strength, which runs through until about the 1^st week in January. Technically, it looks great on a chart. It has had a huge run on the upside, and is outperforming the market quite significantly. Base metal prices are moving significantly higher, and it’s going to have a direct impact on earnings.

We have seen a huge increase in the price of coal, and this company is very much levered to coal and zinc. It has run very hard very fast, because it was a highly levered company. Relative to its peers, it has run very fast, and he wouldn’t be surprised to see a bit of correction, particularly if some of these coal contracts pull back in price a little.

He wished he owned it. It went up because of coal prices having firmed up and going higher than analysts predicted. He thinks prices will moderate next year and then comeback down somewhat. When Fort Hills comes on line they will have another leg of cash flow. It should do okay to hold for 4 to 5 years.

It has had a huge run. China cut back. It is still a good sign. From a seasonal perspective it is from Mid-November. He usually waits longer until the market sorts itself out. The analysts are getting cold on it.

Copper, zinc and met coal. It was down to about $4-$5 in January, and is now up to $27-$28. Any stock that moves up 200% in the course of the year, you are prudent to take some money off the table. Analysts have been moving their targets up, so there are probably still some opportunities for growth, but he still sees too many risks. If you own, consider taking profits.

This has had a huge run this year, and one of the best performing stocks on the TSX, because the price had gone down a lot, but also because there has been a huge recovery in coal pricing. They also have a big oil sands project. A big part of their business and earnings driver is met coal pricing. He wouldn’t buy this right here.

Commodity prices got depressed at the beginning of this and last year, and there has been a bounce back. There is a huge movement of mindless money buying and selling things, and taking them down to ridiculous levels. The recovery on this is partly from deeply oversold levels, where people thought the world was coming to an end. Coal prices are really driving a lot of the upside for this company. His sense is that it is more momentum trades in the stock market than anything else. He would be very, very careful.

Recently bought this on the expectation that with stronger met coal prices, which has been a big driver in the near term, the market is still underestimating what it could do to earnings. He is trying to capture the near term momentum of the stock, but then would probably trade out of it, and let it settle back in to the reality of where met coal might be in the 2^nd half of next year. Thinks there is another 10% upside.

Teck Resources (TCK.B-T) or BHP Billiton (BHP-N)? Both are a little overvalued and most analysts would rate them as a Hold. This is a good company, and it is just a matter of scale. BHP is a global diversified mining company, where this one is much more of a strong regional player in Canada. If you believe there is going to be a global upswing in mining and commodity prices, you would probably want this one.

Thinks some of these metal commodity stocks have gotten ahead of themselves. He would be cautious, and if he owned some, would consider taking some off the table.