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

Material stocks have really had a difficult few years. A bigger problem is that in a lot of the markets, this cycle has had a reply response. It is not so much that the global economy is dead, but there has been enough of a reply response. It is very important to watch in each material company, what they produce and how much. This company has a very large exposure to coke and coal which has not been very good shape. The outlook does not look good for the next couple of years.

Stock has been hammered, perhaps with some justification. It is much more a metallurgical coal company now than it was in the past. Just did some contracts on met coal at about $116-$118 a ton, which is very, very low. The fear is that with a slowdown in China, there is not going to be the demand for met coal. That is a very short term point of view. In the long-term, we are going to see better markets for copper, zinc and met coal. He has been watching this very closely to see where he will jump in on it. This has the potential to be a $30 stock again.

She owns a little bit. Has been taking a bath this week and is almost at the capitulation stage. Feels the dividend is safe. They refinanced their debt so there is nothing coming due for the next few years. They are a low cost producer in the commodities they participate in. She wants to watch the stock price stabilize before buying more. Also, wants to see commodity prices stabilize as well.

He got out a few years ago. Iron ore markets’ outlook is pretty poor. It is the last iconic Canadian company left. He would wait for commodity prices to bottom. Doesn’t see any upside much into next year and perhaps after.

For less income oriented clients. Sticks with it. They produce some of the most demanded commodities in terms of coal and zinc and they will be demanded for some time. Economic fundamentals look solid and should be good for demand. 4+% yield and they are committed to that dividend. Close your eyes for now.

A lot of insider buying recently. It has not been a winner for him yet. He was attracted because the balance sheet seemed pretty stable and the dividend safe. Their main products longer term were positive. In the near term commodities seem to be going down as the US$ goes up.

This is probably one of the finest resource/resource companies from a management and spread of resources point of view. The stock is very cheap. If the market rotation carries on, as he expects along with global expansion, he thinks this will pick up. His minimum price target on his FMV calculation is $40, but that is against the background of steadily falling earnings. Doesn’t see a lot of downside risk in the meantime, but would like to see some resource price strength, which he thinks we will get.

Just recently bought this one. The US$ went on a bit of a rout here and really hurt the materials. As well, the China sentiment got more and more negative. Feels people have gone too negative and stocks were oversold. Thinks this is a stock that will get back.

Coal has been under pressure lately, but he expects it is bottoming. Don’t look for anything dramatic for a couple of quarters. Copper is also bottoming out and zinc looks pretty good. When Fort Hills comes on line you will see an increase in value.

A cheaper alternative would be Sherritt (S-T). You want a diversified metal/mineral conglomerate and this is probably the best bet in terms of its size and management. Like all resource stocks, it has been a very uninspiring performer over the last year. The Chinese credit squeeze has definitely hit the prices of most of the base metals. Not the time to be buying unless you are feeling more enthusiastic about the outlook for Chinese domestic growth and its recovery.

Seasonal tendencies on this, throughout the year, are rather sporadic. There is not a positive tendency for any particular month except for December. December tends to produce an average gain of about 8% and is positive about 90% of the time in the past 20 years. He can’t see too much positive about the chart.

At this price level, you can start building a position. Met coal has been going down, but they are at levels now where a lot of producers are not making money so there is production curtailment. Longer-term, she is positive on copper. Zinc has been in a surplus position for a number of years, but over the next couple of years we are going to start seeing it going into a deficit position. She does like the underlying commodities. Very strong balance sheet. You can probably start picking at this one.

Roughly half of their production is base metals, zinc and copper, which are doing well. The other half is the met coal, which has been a difficult environment. There has been a lot of supply in coal so prices have been very weak. If you are willing to believe that producers will show some discipline and start cutting production, there should be recovery on the pricing side. Their coal quality is good. Have ventured into the oil sands, which he is not terribly comfortable with. He only owns a small stake.

Thinks the story on China is that it will continue to grow. He likes this one. It has not been taken out because of the dual class share structure. He thinks you are seeing the light at the end of the tunnel on this one. We need to see a bit better of a global economy. This is a longer term story.

Thinks this company will have its day again. These types of companies peaked in 2011 and then came down hard. As the recovery continues, and it picks up steam at some point in time, we will have a late cycle push which is when your commodity stocks start to do better. There is talk of an interest rate cut in China on one side, and on the other side you are seeing reductions of capacity in a lot of these industries, where high-cost producers are not able to keep these things going anymore. A little bit of holding is not bad here.