Buy $TECK at $22

BUY TECK:NYSE  at $22

Teck Resources Ltd is a Vancouver Canadian company that is ready to go x-div on the 14th. (Watching this close)

TECK is in Oil Sands, Copper, Metallurgical Coal, Zinc and other metals, chemicals and fertilizers.

We would like to increase our material sector holdings from less than 1% to over 2.5% by the end of 2018.

TECK:NYSE is rated A by Schwab. In summary Schwab gives TECK high marks in fundamentals, valuation, and risk grades. Only downside mentioned in the report is in price momentum.  I see good growth potential here as the economy pickups in the US and around the world.

 

CFRA Report summary:

We think Teck has already made great progress at improving its balance sheet and we forecast strong free cash flow in 2018 and beyond, as Teck ends its large capital program to fund the Fort Hills oil sands project. We think recent improvements in MC prices greatly improve Teck’s outlook, but we suspect prices could drift lower, as high prices encourage new supply. We think average zinc prices could see a meaningful increase in 2018 on supply constraints, which would be a major tailwind for Teck. We note copper supply disruptions in 2017 accelerated a move to a structural supply deficit. Copper fundamentals are positive, in our view, given growing demand and a lack of new new supply.

 

From the company:

CORPORATE STRATEGY. TECK attempts to increase its profitability by using its core mining skills to add long-life, high-margin businesses to its portfolio. The company is committed to a strategy of diversification in an effort to reduce volatility.

Bulls Say
  • Increasing emerging-markets demand for steel and the relative paucity of high-grade metallurgical coal deposits should backstop pricing.
  • Teck has the option to boost annual metallurgical coal production capacity to 31 million metric tons in the next couple of years (2016 production: 27.6 million metric tons) if prices warrant. This capacity expansion would come at a low incremental capital cost.
  • With key operations in stable, developed countries like Canada, the U.S., and Chile, Teck has a better country risk profile than some of its globe-trotting peers.
Bears Say
  • A slower-growing Chinese steel industry will exert significant downward pressure on metallurgical coal prices.
  • In aggregate, Teck’s copper business isn’t particularly cost advantaged, and in periods of weak copper prices, certain operations might struggle to generate positive margins.
  • Like many miners, Teck has seen costs rise incredibly quickly over the past several years, threatening serious margin compression if the tide goes out on pricing.

Most Recent Update:
December 06, 2017 12:05 ET (17:05 GMT) DJ Teck Resources Limited Price Target Is Maintained at C$38.00/Share by Scotia Capital

 

 

 

 

 

0saves
If you enjoyed this post, please consider leaving a comment or subscribing to the RSS feed to have future articles delivered to your feed reader.

Leave a Reply

Your email address will not be published. Required fields are marked *