Why is Teck Cominco Suffering?

While in the midst of a volatile market and a host of worrisome global issues, perhaps it is natural to try and find a company that has experienced a significant drop in its stock but boasts sound fundamentals and a healthy profile going forward. Teck Cominco (TCK) is, at least to me, something of a mystery. First, its stock has taken an approximate 40% hit over the past couple of months from 54 to 34 and it is flirting with a 52 week low. However, it now trades at a p/e of 7.6 and, if one is to believe the prognosticators, TCK is looking toward substantial growth in the mining world (primarily nickel) through its customers in China.

However, one has to wonder why the market has hit TCK with such a heavy hammer. I can understand the financial melt down that has caused some authors to suggest that even such a giant as Citibank (C) be split up and sold in pieces. But it becomes much more difficult to ferret out the reasons why a company such as TCK is suffering. I have tried and failed. The conservative in me worries about recession and falling knives and general malaise about the directions we will take politically, but the investor in me is whispering that TCK looks like a sound investment.

Disclosure: Author has a long position in TCK