Teck Resources Ltd. (B) (TECK.B-T)

(A Top Pick Jan 29/24, Up 18%)

Participates in a commodity bull market. Last time, in early 2000, went up by several 100 percent. We've been over a decade in a commodity bear market, and companies are now just waking up. Very early stages. A portfolio centrepiece that can generate real returns over the next 5 years.

They're exiting coal to focus on copper (South American). He loves the future of copper, but the risk is their expansion in Peru. See what happened in Panama. Buy only a small portion. He prefers Capstone because it operates in safer Chile.

Would've liked a better return. They're about to sell an asset which will reduce all debt and give them a few billion cash which will drive future growth. Their QB2 copper project continues to ramp up and will drive copper production up 50% by 2025. They're the copper champion of Canada.

Commodity play, has always been wildly volatile, and he avoids this type. Stock goes up and down with the commodity price. He prefers a more stable cashflow. Getting rid of coal is a net positive. 

The next economic cycle over the next two years is very good for materials and Teck is coming into new production. It has good copper production this year which will double next year. It generates very good cash flow which is good for dividend holders.      Buy 19  Hold 1  Sell 1

Remains the largest Canadian miner. Will they spin off their coal business? They will do well. They are major produces of copper and zinc, which are needed in EVs. The current valuation is fair, right at book value. You're not buying this for the dividend.

He took profits earlier this year when shares got frothy, but still likes it. He expects higher copper prices. Is looking for a better entry point.

Selling coal assets to Glencore, making it now a pure play on base metals. Copper outlook is great. Influx of cash, taking a really big overhang off the stock. Late 2024/early 2025 will be debt free, free cashflow will be humming. Stock's not responded, perhaps due to regulatory concerns. Yield is 1%.

Their report this morning revealed problems in Chile and other others--costs will continue to rise in energy and labour. $44.48 is his target. Consider this at lower prices later.

He's attracted to copper in the longer term. In the very near term, the commodity will be weighted by overall economic conditions. More a restructuring play than a copper play right now. Well run, wide range of assets. World-class coal assets are undervalued. More stable cashflow. Prefers it to HBM.

The charts for renewables versus other energy have done a complete flip over the last 2 years. The narrative that renewables are going to take over from carbon is greatly exaggerated. How much more upside is there? OK at these levels, but not compelled to add here. Trim when it's high.

China demand will affect business.
Current share price does not justify investment.
Hard to predict outcome of business. 
Cyclical commodity that is hard to earn profits in. 

Unsure on future of business.
Not good if business is sold to Glencore.