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Teck Resources: Firing On All Cylinders After Reporting Phenomenal Operating Cash Flow


  • Teck is enjoying a massive windfall from high copper, coal and zinc prices.
  • This allows it to self-fund its massive QB2 project without having to raise a single dollar in debt.
  • Of course this may be a temporary effect, but every week the commodity prices remain high, Teck gets stronger.
  • QB2 is almost ready for production (in 2022) and will double Teck's copper output in 2023.
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Copper scrap, raw material industry

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In July, I was bullish on Teck Resources (NYSE:TECK) as it looked like there was a perfect storm brewing for the commodity producer. The price of metallurgical coal was going through the roof while

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This article was written by

The Investment Doctor profile picture

The Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks.

He is the leader of the investment group European Small Cap Ideas which offers exclusive access to actionable research on appealing Europe-focused investment opportunities not found elsewhere. The a focus is on high-quality ideas in the small-cap space, with emphasis on capital gains and dividend income for continuous cash flow. Features include: two model portfolios - the European Small Cap Ideas portfolio and the European REIT Portfolio, weekly updates, educational content to learn more about the European investing opportunities, and an active chat room to discuss the latest developments of the portfolio holdings. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I may write put options on Teck from time to time.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (12)

I’m recently long on TECK, Investment Doctor. You sold me.
So curious about this company. In 2018, its earnings were around $3.08 a year and the stock was trading and peaked at around $31. Now it has earning of around $1.50 and its trading at $35. I get that it's a low P/E value stock and those are popular right now, but aside from the low P/E what is attractive about this name?
The Investment Doctor profile picture
@Murrs700 Euhm. The C$1.53 EPS was the Q3 EPS. Not the annual EPS. The adjusted EPS in 9M 2021 was C$3.12 per share and that included the lower coal & zinc prices in the first half of the year... Expect a full-year EPS of closer to C$4.5-5 on an adjusted basis, and likely north of C$5 in 2022 at the current commodity prices.

And what's attractive about Teck? It's in the three 'right' commodities right now. Copper, coal & zinc. A one-stop shop for exposure to these three commodities.
When can it break $30 usd?
Alfgolf profile picture
@Moanna I hope with special dividend and results Q4.... Perhaps February :)
Great analysis Zinc and Coal prices will be higher for quarter four as there is at least a month Lag in Coal prices and remember at least half of third quarters earnings were in the month of September with high coal prices which were stronger in October and November because of the Lag
What do you think of Yamana's copper project?

Alfgolf profile picture
Nice summary.. But I can't understand why You and Teck say the copper production will double?! TECK has only 60% of QB2.... Or is there something I miss? Hope that the share price will rebound soon...
The Investment Doctor profile picture
@Alfgolf You are actually right, but I think Teck also includes anticipated production increases at Highland Valley.

If they would 'only' refer to QB2 to justify the production double, I'm with you. The stake in QB2 would only add about 150,000 tpa.
Alfgolf profile picture
@The Investment Doctor :) 180k...Nameplate CA. 300k...60%---180k
The Investment Doctor profile picture
@Alfgolf Your 300k starting point is copper-EQUIVALENT though, isnt it? Not all of that will be copper. So I think that explains our little discrepancy - but we are on the same page
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